Security selection, combined with effective risk management, are the cornerstones of a successful portfolio management strategy. We embrace this challenge by blending two approaches which marry a top down macro perspective with a unique bottoms up security selection process. In short, our portfolios are composed primarily of the “Core,” companies that provide rising income streams and the “Opportunity,” companies which we believe offer the potential for substantial capital appreciation over time.

The “Core”

dividendsOur top down macro perspective enables us to focus on improving sectors and industries which will then be emphasized in the “Core” portion of the equity portfolio. Core names are often larger companies that are leaders in these more attractive sectors and industries. Characteristics of core holdings are:
• Sustainable competitive advantages
• Rising earnings, cash flow, and dividend growth
• Dominant or growing market share
• Exceptional management

The “Opportunity”

We complement “Core” holdings with “Opportunity” stocks, borne out of a unique security selection process. “Opportunity” stocks are securities that we believe offer the potential for significant capital appreciation. Many of these companies have little or no analyst coverage. This approach expands the investment opportunity set and thus expands the risk/reward spectrum for our clients. Characteristics of opportunityopportunity stocks are:
• Unloved stocks that are inefficiently priced
• Companies with promising or disruptive technologies
• Companies experiencing enduring, secular tailwinds
• Restructuring stories

We feel this investment process and strategy sets us apart from our competitors. Many of our competitors invest solely, or primarily in one area of the market (e.g. large cap value or GARP, solely US, etc). Our portfolios consist of large and small cap stocks, value and growth stocks, momentum and contrarian stocks, domestic and international equities, REIT’s, etc. It is very difficult to pinhole our strategy into any one Morningstar style box.

Fixed Income Strategy

Bonds are an important part of our clients’ portfolios because they provide stability and predictable interest payments. Our fixed income strategy begins with a macroeconomic perspective that takes into account the current business cycle which, in turn, guides us to the direction of interest rates. The result of our ongoing anticipation of interest rates determines the maturity concentrations within our clients’ portfolios. Our process enhances returns primarily through the careful analysis of:
• Individual credit profiles
• Sector analysis (government vs. corporate vs. agency)
• Liquidity and marketability

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