Q: What is your investment philosophy?

A: We are not looking to make shortterm trades. We are looking to invest in high quality mid-cap companies with a consistent record of earnings growth that we can hold for a long period of time. We believe that if we do that, over time we can have better performance than the market with less volatility.

Q: What are the characteristics that would designate a high quality company?

A: There are some qualitative and quantitative metrics. One would be a leadership position in the industry. Oftentimes, the companies we are buying are unique companies that serve a niche market and so there aren't lots of competitors. Sometimes they are the leader because they have created the market.

We also like experienced management with a successful record. It gives us confidence that they can continue to execute going forward.

The company has to have a sustainable competitive advantage. For example, a company with a historical earnings growth of 20%, can it sustain this growth in the future and if it can we will consider it for our investments.

On the quantitative side, we do screening and we're looking for healthy historical and projected earnings growth. The minimum would be earnings per share growth of 15% and revenue growth of 12%, both historically and projected. Our historical earnings per share growth over the past five years has averaged 28% per year versus 26% for the Russell Midcap Growth index. Our companies are projected to grown 18% per year, whereas in the Russell Midcap Growth the average company is projected to grow 16% per year.

Q: Why do you look at revenue growth?

A: Because it ties right into the sustainable advantage. You can only grow company's earnings by cutting costs for a short period of time. In order for it to be an open-end growth story or something that we can hold for a long period of time, there needs to be growth on the top line.

We look for strong financials and low debt level on the balance sheet. We screen on debt to capital ratio. Our com panies have to have debt ratio of 50% or lower. We like companies with financial flexibility especially in times of economic slowdown when the companies with a stronger financial position are better able to weather economic storms and continue to invest in their businesses during the downturn. That means that they are able to take market share and come out stronger on the other side.

We also look for companies that have high return on equity and return on assets. As a final point we look for companies that have high operating margins relative to their industry and/or margin expansion which allows for even greater earnings growth.

Q: What is your stock selection process?

A: There are four portfolio managers in our investment team. Bill Priebe and Amy Croen, who are the co-founders of Geneva Capital, started this company back in 1987. I've been with the company since 1999. Scott Priebe, who is Bill's son, joined our company four years ago.

The four of us meet regularly to discuss what's happening in the portfolio. The stock selection process starts with idea generation and probably about 70% of our new ideas come from conferences and company visits. We like faceto- face meetings with managements. It's very important for us to understand their long-term vision and strategies.

Q: What is your investable universe that you screen?

A: The market cap range of the Russell Midcap Growth Index is our starting point. Most of the new names that come into our portfolio are between $1 and $5 billion. From that standpoint there are a lot of mid-cap managers that will hold larger market cap companies.

We have a higher concentration of stocks within the mid-cap range. Most of the financial advisers and firms that we work with have selected the fund for their asset allocation models because of that commitment.

As companies mature they tend to end up having slower growth rates so we try to buy them in the sweet spot of their lifecycle. Most of the time we identify such companies by face-to-face meetings but we also do screen the mid-cap universe using the William O'Neil database.

We do have another level of screening. It's what we call our “screening out“ process and it helps us avoid unnecessary risk. An example of a high risk idea for us would include IPOs. We like to see generally two years of trading history before we buy a company. We only buy US-based companies.