Richard Driehaus
Momentum Growth
Richard Driehaus founded Driehaus Capital Management in 1982 and is often credited with formalising momentum investing as a discipline. He rejected the premise that money is made by buying low and selling high, arguing instead that far more money is made buying high and selling higher: a company whose earnings are accelerating and whose stock is already outperforming is displaying evidence that something has changed, and that evidence tends to persist longer than the market initially prices. His process looked for positive earnings surprises and quarter-on-quarter acceleration, confirmed by price strength and volume, and paired that with a strict sell discipline — cutting a position quickly once the thesis stopped confirming rather than waiting for it to prove him right. What this implementation can and cannot see. Three of the four inputs described above are absent from this dataset rather than merely sparse, and the distinction matters: a sparse field justifies lower confidence, an absent one means the test was never run. There are no quarterly statements at all — every stored period is annual — so quarter-on-quarter earnings acceleration is not available, and criterion 4 substitutes an annual reading that measures the same idea sampled four times more slowly and lagged by up to a year. There is no analyst-estimate source anywhere in the schema, and a surprise requires an expectation to surprise against, so positive earnings surprise is dropped outright rather than weakened. Trading volume is untagged for 90.5% of price bars, so volume confirmation is dropped. What is scored here is therefore a momentum-and-growth screen — a defensible one, and not the Driehaus method. Read a verdict on this page as the former.
Methodology fidelity
Thematic proxySources reviewed 2026-08-24The central Driehaus idea—earnings inflection and positive expectation revisions confirmed by price strength, with strict sell discipline—is well supported. This dataset lacks quarterly fundamentals, analyst estimates, and reliable volume, so three signature inputs cannot be implemented. Annual growth and simple price momentum are substitutes. The lens is already hidden because its mechanical verdict is not faithful enough to carry the Driehaus name.
Valuation Method
No intrinsic value computed
No investor formulaDriehaus argued explicitly that buying below a computed intrinsic value was not how he made money. A discounted cash flow here would contradict the source, so this framework scores criteria only.
Screening implementation (7 criteria)
| # | Criterion | Metric | Threshold | Data Source |
|---|---|---|---|---|
| 1 | 12-1 Price Momentum | 12-month return, skipping the most recent month | Above 0% | market_data monthly bars over the post-2025 live window. Refused, and shown as no data, for any window that crosses a share split — those bars are stored as-traded, which is the wrong basis for a return. |
| 2 | Near 52-Week High | Discount to trailing-12-month high | Within 25% of the high | market_data monthly bars over the post-2025 live window. Refused, and shown as no data, for any window that crosses a share split. |
| 3 | Annual Revenue Growth Acceleration | Latest annual revenue growth vs. the prior year's | Growth rate rising year over year | Income Statement: Revenue, 3 annual periods. Annual because no quarterly data exists in this dataset. Computable for roughly 76% of companies; growth off a non-positive base is refused. |
| 4 | Annual Earnings Growth Acceleration | Latest annual EPS growth vs. the prior year's | Growth rate rising year over year | Income Statement: Diluted EPS, 3 annual periods. Annual because no quarterly data exists — Driehaus measured this quarterly. Computable for only ~37% of companies, because growth off a negative or zero EPS base is meaningless and is refused. |
| 5 | Sustained Revenue Growth | 3-year Revenue CAGR | Above 10% | Income Statement: Revenue, 3-year history |
| 6 | Sustained Earnings Growth | 3-year Diluted EPS CAGR | Above 15% | Income Statement: Diluted EPS, 3-year history |
| 7 | Risk Discipline | Willingness to cut a position that stops working | Is there a sell discipline when momentum breaks? | Qualitative: The New Market Wizards (Schwager, 1992) |
Verdict Logic
PASS when at least 4 of 7 criteria hold, applied as a proportion of the criteria actually evaluated. IMPORTANT LIMITATION: three of the four criteria that defined the Driehaus method could not be built on this dataset, because the underlying data is absent rather than merely sparse. There are no quarterly statements at all, so quarterly earnings acceleration is replaced by an annual reading that is the same idea sampled four times more slowly and lagged by up to a year. There is no analyst-estimate source, so positive earnings surprise is dropped outright. Trading volume is untagged for 90.5% of price bars, so volume confirmation is dropped. What remains is a defensible momentum-and-growth screen, but it is not the Driehaus method, and a verdict here should be read as the former rather than the latter. TWO CRITERIA CAN ABSTAIN: the live price window is stored as-traded, which is the wrong basis for computing a return across a share split, so both price criteria refuse any window they cannot certify against the split record. Measured on the 2026-08-19 run: 18.1% of scored companies were refused as uncertifiable and a further 4.6% had too short a window, so 22.8% show no data on this criterion — with a reason, rather than as a failure. Note that an abstaining criterion still occupies a denominator slot, so a score of "3/7" means three criteria confirmed out of seven attempted, not three passed out of seven tested. WHAT THAT DOES TO THE VERDICT, measured over the full 2026-08-19 scored corpus of 6,410 companies: the two earnings criteria are the ones that go dark (no data for 64.0% and 67.8% of companies), and of the 1,933 companies this framework passes, 855 — 44.2% — pass NEITHER of them, with 26.8% having neither one even evaluable. A company therefore routinely clears the bar on rising price plus revenue growth with no earnings evidence at all, which inverts the thesis: Driehaus bought earnings acceleration confirmed by price, and this passes price unconfirmed by earnings. Raising the 4-of-7 bar would not fix it, because the seven criteria carry only about three independent signals — 1 and 2 read the same price window, 3 and 4 are both acceleration, 5 and 6 are both CAGR, and 7 passes everyone.
Sources
The New Market Wizards
primary1992Jack Schwager
Contains the extended Driehaus interview that is the primary public source for his process: buying strength rather than weakness, the role of earnings acceleration and surprise, and the sell discipline that bounded his losses.
View source →Driehaus Capital Management Investment Philosophy
primary1982–presentDriehaus Capital Management
The firm’s published description of its growth process, including the emphasis on earnings acceleration confirmed by relative price strength.
View source →