THE INVESTMENT PROCESS

Step I:  TVM Quantitative Process:

1. From a universe of more than 1,800 securities, TVM identifies and ranks all securities that meet the four basic criteria of Tandem's Investment Philosophy.
2. All securities are comparatively valued over 15-, 10-, 5- and 3-year time periods and ranked as follows: BUY (historically undervalued), ACCUMULATE (fairly valued), HOLD (mildly overvalued), SELL (historically overvalued) or NOT RANKED (failure to meet criteria).
3. Securities ranked BUY or SELL advance to Step II of the TVM Process.

Step II: TVM Semi-Quantitative Fundamental Analysis:

1. Deeper fundamental analysis identifies attractive companies while eliminating false signals based on valuation alone.
2. Consistency of earnings and dividend growth must be supported by strong fundamentals and management.
3. Securities that pass both the Quantitative and Semi-Quantitative Processes advance to Step III for human review.

Step III:  The Investment Committee

1. The Investment Committee analyzes and debates the findings of the previous steps of the TVM process.
2. If the Committee accepts the findings, action must be taken.
3. Action is strictly prescribed by Tandem's Buy, Hold and Sell Disciplines.
4. No transaction can take place until the final stage of the process is complete.

Step IV: Technical Analysis:  

1. Once a transaction is identified, Tandem's technical analysis model identifies strategic entry or exit prices.
2. Stocks that are either over- or undervalued may remain so for a prolonged period of time. Technical analysis provides discipline to the process and ensures better trades.

For a complete discription of how we implement our decisions, please see our BUY, HOLD & SELL DISCIPLINES.

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