The Trident Investment Selection System How We Select Stocks For Inclusion in The Trident Confidential Model Portfolio

Each year, we spend literally hundreds of hours tracking down the best investments available in the world today.

We receive information from top analysts, brokers and from the many investment sources that we have access to.

After we review all the information and do our own due diligence (which weeds out around 95% of all recommendations and ideas), we select only the best investment opportunities for inclusion in our Portfolio.

Our selection process, the proprietary Trident Investment Selection System applies a series of fundamental and subjective criteria to each potential investment prior to the investment being added to the portfolio.

For example, we are examining companies that have the following criterion:

1. Positive Earnings Revisions. I like to see stocks that have had their earnings estimates increased by Wall Street analysts. This usually tips us off to a stock that’s about to “beat earnings.”

2. Positive Earnings Surprises. Speaking of beating earnings, I also look to see if a stock has been able to beat its earnings estimates, and by how much. This is an important number to watch because it often tells me about a stock that Wall Street isn’t paying much attention to or doesn’t yet “get.”

3. Increasing Sales. I also like to see a company that can grow its sales over time. Why? Because it’s one number that is hard to fake. My background is in accounting, and I’ve always made sure to steer away from companies that use questionable accounting practices. Sales growth is a solid indicator.

4. Expanding Operating Margins. This simply tells me if earnings are growing faster than sales. A company that’s able to expand its operating margins is usually a company that has a dominant position in its industry. This company can raise prices without seeing a drop-off in sales. That’s a nice place to be.

5. Free Cash Flow. This tells me how much money a company has left over after paying for the costs of its business. Having a strong cash flow is important because it allows a company to invest more resources in growing its business.

6. Earnings Growth. This is at the heart of all good financial analysis, and I rely on it as well. As long as any company is able to grow its earnings consistently, its stock will do well.

7. Positive Earnings Momentum. It’s not enough for me to see a company's earnings growth—I also want to see its rate of growth increase.

8. Return on Equity, or ROE. This is the gold standard. ROE tells me how efficiently a company is managing its resources. I can’t interview every senior manager at a company, so I like to think of ROE as a report card for management.

9. Price Appreciation Potential. We examine how under valued a stock is and look at the potential price appreciation based on it’s present events, industry valuations and Price to Book (PB Ratio) valuations. We target companies that have “above the norm” potential to gain in price short to medium term.

In addition, we examine:

• Return on Assets
• Industry Trends
• Industry Strength
• Management Skill and Stability
• "Insider" and management ownership of shares
• Institutional Support
• Business Model and Products
• The Company's Position in the market and competitors
• Price to Earnings Ratio
• Sales Growth
• Earnings Surprises
• Debt
• Balance Sheet Health
• Recent Acquisitions
• Export Markets
• Recent Share Price Movement
• Plus a few other "barometers"

Once this is all done, and we are convinced that we can achieve out performance over 2-5 years, will we invest.

Our record in recent years has demonstrated our ability to achieve almost 90% per annum returns using this selection system.

In effect, we provide you, the reader, with what we believe to be the best of the best in the world of investment opportunities.