Due Diligence

At Westcourt, we ensure that our review of the investments we recommend is thorough and personal. This entails a combination of both quantitative and qualitative analysis designed to provide a complete picture of a prospective investment.

Our methodology begins with a “macro” analysis of categories of investments, studying their benefits and drawbacks from the point of view of our investment strategy. For those investment models that pass the macro test of general suitability for our clients, we then apply an even more rigorous “micro” analysis of the investments in Canada that fit within this model. This level of analaysis is more detailed and more personal. Among a long list of questions that are dealt with at this stage are the following:

  1. How much of the management team’s own money is invested alongside your investors?
  2. What are the firm’s long-term objectives?
  3. How much experience does your team have in these and related investments?
  4. What are your management fees and exactly how are they calculated?
  5. What protections and controls have you designed in your investments to protect investors from illegal and unethical conduct?
  6. What are your redemption rules and how have they been applied in the past?
  7. Are your firm’s financial results audited and who are the auditors?

Once all of these issues are dealt with to Westcourt’s satisfaction, we embark on the third, and perhaps most important level of analysis, namely due diligence on the actual managers involved with the prospective investment. Many investment professionals support the theory of “betting on the jockey, not the horse”. At Westcourt, once we have established the strength of the horse, we get to know the jockey. This process is enhanced with the commissioning of third-party independent analysis of the investment and the investment manager by a Chartered Financial Analyst (CFA). Only once we have received a positive report from the CFA we have hired (these detailed reports are made available to our clients) and have convinced ourselves of the quality of both the investment model and manager of a specific alternative investment do we officially recommend any investment to our clients.

 

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