Ancora seeks to purchase ownership positions in companies whose current market values are less than their private market values. As the first step in determining private market value, Ancora focuses on a company's financial fundamentals and valuation. Ancora examines and forecasts an investment’s sales, earnings and cash flow trends, with a view toward the economic realities of the business. Balance sheet and cash flow analysis is conducted, with a focus on capital requirements, proper capitalization and tangible asset value. These factors are then weighed in combination with a company’s current valuation and growth potential.

The underlying question we ask ourselves is always the same. "Would I, using my own capital, buy the entirety of this company at the current stock price?" While not sufficient to provide an answer, a company's value relative to its financial metrics is a key consideration in answering this question.

Our valuation screening focuses on two situations:

1. Companies trading at a significant discount to their liquidation or going-concern value. Certain issues may trade below tangible book value. This can occur in times of broad market pessimism or Wall Street consternation with a company's near-term outlook. Other companies have hidden assets that are not reflected in the company's financial statements, such as investments in private companies or understated real estate values, which, if properly valued on the balance sheet, would result in the company trading at a discount to tangible book value. Ancora works to understand catalysts that will unlock the value of the target company's assets, although we will also buy based on a company being too cheap to ignore.

2.  A company that is trading below the discounted value of its future free cash flows. We subject these types of investments to financial analysis that focuses on quantifying a company's excess cash flow - cash flow from operations less investments necessary to expand and sustain the business, such as maintenance and growth capital expenditures. Companies can use excess cash flow to enhance shareholder value, by buying back stock, paying dividends, paying down debt and making strategic acquisitions. The underlying tenet supporting this approach is that the ultimate function of a business enterprise is to generate free cash flow to its owners.

Our initial screening to identify companies with undiscovered value takes several forms:

- Conducting extensive financial screening using our state-of-the-art computer databases;

- Gaining referrals from contacts, including CEO's and financial professionals across a number of industries;

- Constant tracking of a large number of companies that the principals have followed for a number of years. Occasionally certain stocks will decrease in value significantly below their private market value based on sentiment or short-term issues.