Three principal themes dominate the investment philosophy of Eubel Brady & Suttman Asset Management:

• Searching for value in the businesses we buy
• Focusing on the long term when evaluating businesses and people
• Thinking independently of the Wall Street crowd

Our search for value includes a quantitative and qualitative approach. Statistical norms are applied to company financials to quantify a fair value for the business. We are attracted to businesses that have steadily growing revenues, increasing profit margins and are priced below market price multiples. We look at the economic characteristics of a business to arrive at what we deem an intrinsic value. This analysis considers the company's financial strength, anticipated cash earnings, return on capital, capital requirements, and other metrics. Judgments regarding the quality and nature of the business are made to complete the valuation process.

We consider a company's competitive position, quality of management, compensation structure, insider ownership, corporate culture, risk of obsolescence, and other factors. Management compensation is closely scrutinized to ensure that incentive compensation is tied to the metrics that reflect the creation of shareholder value. We prefer to invest in franchise-type businesses, usually not turnaround situations, with exceptional management in place. We trust management will adapt to changing environments, producing above-average results over the long term.

Thinking independently of Wall Street keeps us from adopting the herd mentality. This is a difficult task during periods of great volatility for most investors. Being part of the crowd ensures a level of comfort, but rarely above-average returns. A wall of worried investors often hides successful investments. A disciplined approach helps take the emotion out of our decision making.

A portfolio typically has between 25 and 35 positions, and maintains broad diversification. Individual positions are typically limited to 5% of the account at cost and are normally held for three to five years. Portfolios are monitored daily to ensure conformity to security, industry, and sector targets.