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We utilize a multi-step investment process. We start by
reviewing the economic environment to identify which sectors
we expect to benefit from movements in the business cycle.
Next, we identify companies which generate returns above the
cost of capital with conservative balance sheets. We look
for companies with a stable operating history within their
sector. Finally, we estimate the company’s value to try and
limit downside risk. For example, we have and continue to
believe that energy prices will remain higher longer than
the market expects. We have made a conscious effort to
overweight energy and underweight consumer discretionary in
our client portfolios.
We supplement our fundamental analysis with technical
analysis to identify companies that we believe will generate
risk-adjusted returns greater than their benchmark. We
believe in our investment discipline, but constantly
fine-tune it for the changing world we live in.
We try not to hold equity positions in an individual
security greater than 10% of the portfolio. However, there
are some clients with concentrated positions in low cost
basis stock. In these accounts, we weigh the need to
diversify against the potential tax liability on a
case-by-case basis. On the fixed income side, we continue to
maintain a short duration based on our analysis of the yield
curve and our expectation of future interest rates. |
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