Equity Selection

Three core evaluation strategies are utilized when identifying potential companies to invest in for the equity portion of our client portfolios. A thorough analysis is performed on these companies identified by our core strategies to determine if a potential investment opportunity is present. Consequently, if an attractive investment opportunity exists, buy and sell price targets are set for the stock. Companies and their stock are consistently evaluated for evidence that could change our investment rational. Our core equity strategies and pricing targets are outlined below.

• Sustained Growth Strategy
  The Sustained Growth Strategy identifies companies with characteristics that enable them to experience continued growth. These companies are likely to have extended periods of rising sales and profits. Factors taken into consideration are overall business strategy, stage in the business life cycle, barriers to entry, level of demand, competitive strengths and weaknesses, and the current economic environment.

• Supply-Demand Strategy
  The Supply-Demand Strategy is utilized to identify cyclical companies whose profit fluctuates significantly during an economic cycle due to rising and falling demand of its products. A low demand environment can cause a company’s depreciated stock price to become an attractive investment opportunity. Adjustments a company makes to capacity at the bottom of the economic cycle often result in higher product prices, company profits, and ultimately stock price.

• Turn Around Strategy
  The Turn Around Strategy identifies companies who compete in viable industries that have experienced a substantial reduction in profitability compared to their peers. The existence of a catalyst must exist for consideration to the purchase of the stock. Catalyst include the emergence of an activist shareholder, change in company leadership, or the existence of proprietary assets that outside parties covet.

• Price Targets
  The key to success after identifying companies using our core strategies is making sure we buy and sell the stocks at appropriate prices by determining price targets. Establishing price targets involves determining the current fair value and future value of a security using projected earnings and cash flow analysis. Buy price targets are set at a discount to the fair value and sell price targets are set at a premium to the fair value. Price targets are routinely re-evaluated and adjusted with ongoing analysis and passage of time.