Within our equity portfolios, we seek to provide superior performance over the long term while maintaining a low risk profile. The key to our equity approach is not limiting our investment universe to the traditional investment style boxes, but identifying opportunities wherever they exist. Our highly disciplined selection process begins with an in-depth analysis of the overall economic environment. Then, through rigorous industry and fundamental analysis, we search for catalysts that will contribute to the three main drivers of any company’s return:
- Earnings growth
- Price-to-earnings expansion
- Dividends
Ultimately, if we believe these drivers have the potential to produce significant returns over a multi-year time frame, we purchase the security. Likewise, if certain factors begin to have a negative effect on these drivers or the stock becomes fully priced, we sell the security.
We attempt to avoid undue risk and feel that concentrating on long-term results is more important than participating in short-term market swings. In times of favorable risk/reward opportunities, we focus our attention on common stocks. As risk levels increase, we shift the common stock emphasis to favor cash equivalents or short-term fixed income reserves to wait for better buying opportunities. The key to building wealth over time is avoiding the big downdrafts in the market and capitalizing on opportunities.
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Equity Approach