A review of the fund's competitors is a good idea, but it is not part of due diligence. Neither is an assessment of the fund's suitability for particular investors. Both of those reviews should be part of the investment decision, but due diligence normally means an analysis of how the fund operates, rather than its investment merits relative to outside criteria. The fund's use of leverage would fall under Hollis' expertise as he considers the investment style, financial policies, and risk profile. Madison Partners appears to have this issue well in hand. However, the fund's research strategy and expenditures are key to understanding how the fund operates, and none of Madison's analysts appears to address this topic. (Study session 13, LOS 31.b) |
