investmentprocess

Investment process

700 environmental companies.

Greenchip has built an investment universe of over 700 environmental businesses with approximately $3.0 trillion in aggregate market capitalization. While there’s always an element of subjectivity in determining the degree to which a business is environmental, we use a combination of our own experience and judgment, an advisory committee, and external research to build and maintain this universe.

Screen for value.

Regular screening is performed on the full 700 company universe with emphasis on margin expansion, revenue growth, balance sheet quality, and cash flow multiples. No matter what the prospects are for a company or an industry, an investment will only pay off in the long-term if the valuation at purchase is appropriate.

Apply private equity style diligence.

More intensive due diligence is performed on the companies that pass screening: a review of financial reports and presentations, management interviews, and building of a discounted cash flow model.

Concentrated portfolio.

We maintain a concentrated portfolio of 30-35 securities, careful to ensure diversification by geography, company size, and environmental sub-sector.

Maintain thematic diversification.

Since inception, holdings in the Greenchip global equity portfolio have fallen into three distinct thematic allocations:

  1. Efficient infrastructure. The first and largest, this includes diversified industrials, engineers, contractors and utility equipment manufacturers.
  2. Renewable utility providers with dependable cash flow streams.
  3. Fast-growing environmental leaders. The third and smallest thematic allocation, these are companies offering unique products and services often based on a technological or manufacturing advantage.

These three themes work together to gain exposure to the broad range of environmental sectors, while reducing overall portfolio volatility.