Investment Philosophy

We painstakingly evaluate companies in three critical areas: financial flexibility, management adaptability, and niche dominance.

Financial Flexibility

SouthernSun invests in companies we believe to be financially strong and flexible. It is important to us that these companies not be reliant on capital markets to execute their business plan. We seek financial strength as evidenced by:

  • Internally generated discretionary cash flow
  • Excess working capital
  • Organic revenue growth

Management Adaptability

At SouthernSun, we believe there is no substitute for knowing the management of the companies in which we invest our clients’ assets. It is critical that management be experienced. We visit with management teams and evaluate their facilities on a regular basis. We want teams to maintain their focus on long-term goals while moving through various environments. In brief, we look for management that is:

  • Experienced
  • Forward thinking
  • Focused on measurable goals
  • Execution oriented

Niche Dominance

An equally important aspect of our investment process is that the businesses in which SouthernSun invests are niche dominant. Our portfolio companies distinguish themselves by the product(s) or service(s) they offer and are at a point in their life cycle when they are not readily recognized or rewarded in the marketplace. The primary competition for these entities is often a division or subsidiary of a large public company or a private company.

Environmental, Social, and Corporate Governance

We believe that evaluating a company’s environmental, social, and corporate governance practices enhances our ability to make good long-term investment decisions. We review ESG considerations with two perspectives:  1) Risk Management, and 2) Impact. From a Risk Management perspective, we seek to understand ESG-related risks which could negatively impact shareholder value in the long run. From an Impact perspective, we believe that those companies that are making materially positive impacts on E, S or G may be in a position to benefit from being on the “right” side of these issues. We believe there are long-term business advantages related to managing a business responsibly, with thoughtful corporate governance.


Portfolio Monitoring

Once companies make it into our portfolios at SouthernSun, our Investment Team conducts continuous evaluations of their financials, as well as monitor the business environment in which they operate. This work is performed from SouthernSun’s headquarters as well as in the field.

We visit management and their facilities on a regular basis. We do not believe we can truly know what is happening at a company unless we maintain regular contact with them. We also take advantage of event-driven market anomalies and adjust our positions, as determined by our Investment Team.