How We Invest

Dr. Hannes Kulvik has spent
decades developing our trade secret,
Stocksifter™, although little has
changed over the years …

Our process is different because we see things differently
Most active equity fund managers rely on stock picking, within predetermined geographies or sectors. Some fund managers take a stand on sector rotation or balance the portfolio based on market trends or fluctuations. Unfortunately, most active fund managers don’t beat their index. Probably because picking stock is quite simply, speculative. Or maybe they focus on short term stock price movements and forget that it is all about the underlying businesses. Whereas we put the businesses, first.

What we think
At Sifter we think that stock picking is too risky and only adds cost to investors because of busy trading. It also relies too heavily on timing. When a fund manager balances the portfolio on stock market trends and fluctuations, he’s basing those decisions on timing. But timing is a game of luck. One that we’re not interested in playing.

What we do
We’re not a passive fund, we’re an active one. But we don’t believe in stock picking, we believe in our process of elimination. One that we’ve applied for over a decade. The difference between stock picking and eliminating might sound trivial, but it isn’t. This page hopes to explain clearly why our process is different from the rest. It is a story of optimising the use and focus of research.

The Elimination Process

How we eliminate, fast.
Instead of trying to find the best investment opportunities Stocksifter™ eliminates the poor ones.

Analysing 65,000 companies is a huge job for any professional analyst team and would take years. Picking the best ones from the universe would be almost impossible and highly speculative. Time that we don’t have to waste and risks we don’t want to take.

By eliminating the poorer performing companies quickly and effectively, we can be sure that the surviving companies are, in fact, superior. Our analytics team uses a number of tools and criteria to effortlessly eliminate weaker yielding opportunities, and they do it fast. Giving us more time to focus on the most promising cases.

Our elimination process combines quantitative, qualitative and comparative analytic methods, through an ongoing process.


The quantitative analysis method looks at all quoted business opportunities in the world and compresses this universe based on our stringent criteria.

We run a continuous procedure that eliminates weak businesses using 30 key statistics, including the sudden death criteria. This process assures us that the companies which pass our process are definitely better than the eliminated ones.


Through our qualitative analysis we dig deeper to better understand if the company will be a winner in the future, whether the expected business returns are sustainable and if the company is potentially undervalued based on 5 years' anticipated yields.

For us, attractive companies are the ones that can differentiate themselves and thus have low competitive pressure. We look for companies with efficient business models, a strong and competitive position within the industry, and a sound strategy to support it all.


Once a prospective company has come this far, it’s time to compare it to our Sifter portfolio, the cylinder. Our portfolio cylinder contains the 30-40 companies we have invested in, in ranking order. The best-yielding investments are at the top of the cylinder. If a new investment opportunity is good enough to be included, companies at the bottom of the cylinder are sold to make way for the new investment.

Through this rigorous process, we are constantly improving the overall yield of the cylinder, thus bringing better returns to our investors.

More Information

Global Investment Scope

The investment universe is huge and there are great companies in all countries and sectors. The challenge lies in knowing which ones to invest in for the long run. The way some investment funds do this is by narrowing the number of companies they look at by focusing on certain geographical areas or business sectors. But that’s not the way we do things.

At Sifter, we have a global scope, because we can. We’re not blind to any new opportunities because we’re not wedded to any specific sector and we include all geographies.

What we don't invest in

The following businesses have certain qualities that increase our risk, so we avoid them.

  • Financial companies that use their balance sheet as an operating means, such as banks or insurance companies, which makes it hard to assess their financial situation.
  • Commodity-related businesses that often lack differentiating capabilities and competitive pressure squeezes margins in the long run.
  • Raw material related businesses relying on too much speculation with raw material price fluctuations.
  • Politically high risk countries or companies which force us to take speculative risk.
  • Companies with high debt burden with too high a risk of destroying value, especially when using debt leverage in acquisitions.
  • Businesses in sectors with lasting over capacity.
High performing companies beat the index

As a managed fund, we believe that following a consistent investment process can outperform the index. You see, some index funds have thousands of companies in their portfolio. As a passive fund, they invest in a bit of everything. They’ve got it all. They’ve got the best but also they include poor performing companies.

High performing businesses are able to gain consistent returns no matter what the market condition. This is especially apparent during a downturn, when the best businesses are able to gain market share and become even stronger in their industry.

Market timing

Market timing succeeds only by luck. Getting market timing right is a skill we don’t claim to possess. That’s why we’re fully invested all the time. When investors place their assets on Sifter, they know that it will be invested in businesses that give us a high yield on the investment. We don’t attempt market timing. We buy business returns and will consider selling these businesses when the anticipated yield on the investment is no longer attractive. We believe that buying and holding quality businesses at attractive yields is the most reliable long-term asset class. And we’re sticking to it.