INVESTMENT CRITERIA | Modena Holdings

Investment Criteria

Modena employs a set of financial and ESG criteria when considering which companies to invest in. You can find this criteria below.

Financial Health Evaluation Rubric

Market Cap (4 Billion+) captures mid-sized firms with substantial growth potential.

EV/EBITDA (<14) allows for valuation premiums in high-growth areas such as solar, wind, and EV technology.

EPS Growth (5YR: 5%+) ensures consistent earnings improvement as the sector matures.

Operating Margin (20%+) filters for operationally efficient companies achieving profitability in a capital-intensive industry.

Payout Ratio (<20%) supports reinvestment into innovation while offering modest shareholder rewards.

Debt-to-Equity (<1) prioritizes financial stability and manageable leverage.

Market Cap (2 Billion+) ensures companies are established, mitigating risks associated with smaller players.

EV/EBITDA (<12) signals reasonable valuations for cash-flow-heavy businesses, balancing affordability and operational performance.

EPS Growth (5YR: 7%+) highlights companies adapting well to trends such as organic farming and sustainable practices.

Operating Margin (5%+) accommodates the typically lower profitability in agriculture due to high input costs.

Payout Ratio (<40%) ensures reinvestment capacity while providing consistent shareholder returns.

Debt-to-Equity (<1) mitigates financial risk and ensures manageable leverage.

Market Cap (50 Billion+) targets market-dominant firms with scalability and established global presence.

EV/EBITDA (<18) balances valuation against the high-growth nature of tech companies.

EPS Growth (5YR: 8%+) emphasizes consistent earnings growth, a hallmark of industry leaders.

Operating Margin (15%+) filters for operationally efficient firms capable of managing costs while driving profitability.

Payout Ratio (<20%) supports reinvestment in innovation over excessive dividend distribution.

ROI (10%+) demonstrates efficient capital deployment and ability to generate sustainable shareholder value.

Market Cap (50 Billion+) targets market leaders with robust operational models.

EV/EBITDA (<12) highlights valuation-driven opportunities.

EPS Growth (5YR: 6%+) ensures consistent earnings performance.

Operating Margin (20%+) filters for well-managed, profitable institutions.

Payout Ratio (<40%) aligns with sustainability in dividend policies.

Price-to-Book (<2) captures companies with strong intrinsic value relative to market valuation.

Market Cap (8 Billion+) includes mid-sized and established companies.

EV/EBITDA (<16) balances affordability with sector dynamics like cyclical demand.

EPS Growth (5YR: 8%+) highlights companies with strong long-term earnings growth potential.

Operating Margin (10%+) reflects efficient operations in sub-sectors like freight, shipping, and airlines.

Payout Ratio (<20%) focuses on reinvestment while maintaining modest shareholder returns.

Debt-to-Equity (<1) mitigates risk in capital-intensive industries.

Market Cap (20 Billion+) focuses on mid-to-large-sized companies with stable operations and scalability.

EV/EBITDA (<14) identifies companies undervalued relative to their earnings, accounting for retail sector dynamics.

EPS Growth (5YR: 4%+) highlights companies with steady improvement in profitability.

Gross Margin (15%+) targets well-managed companies with strong cost control.

Payout Ratio (<40%) ensures a balance between rewarding shareholders and reinvesting in operations.

Price-to-Sales (<2) evaluates companies with attractive revenue-driven growth opportunities.

ESG & Sustainability Evaluation Rubric

Our ESG rating system weighs 4 different rating systems (Morningstar Sustainalytics’ ESG Risk Ratings, MSCI ESG Ratings, The S&P Global ESG Score, and LSEG ESG Scores) to arrive to a score out of a 100. Our score must be above 75 for the company to be worthy for investment. Morningstar Sustainalytics’ ESG Risk Ratings measures the top 50 rated ESG companies, meaning most companies will not be given a Morningstar Sustainalytics’ ESG Risk Ratings score. In this case, the company’s score will be determined using equal weight among the other 3 ratings systems. If the company is scored by Morningstar Sustainalytics’ ESG Risk Ratings, 50% weight will be placed on that score, while the other 50% will be divided amongst the other 3 ratings systems.

Morningstar Sustainalytics’ ESG Risk Ratings

MSCI ESG Ratings

The S&P Global ESG Score

LSEG ESG Scores

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