Equity Portfolio Our Core Portfolio is the implementation of our stock selection process with the client's Investment Policy as a guide, culminating in a portfolio of 10 - 35 stocks. The following two approaches combine to form the primary equity investment vehicle for our clients:
Core I Model Portfolio: The Core I (formerly Relative Value) model portfolio invests in the common stocks of U.S. based companies of all sizes but is concentrated in medium and small capitalization stocks. Starting with our Focus List, we select the securities of companies that have extremely strong quantitative characteristics. We then proceed to score and rank companies based on these quantitative factors which include both fundamental and technical factors. Companies that are above a baseline score are considered for the Core I portfolio. The weighting of each position is based on a combination of qualitative, quantitative and valuation characteristics. The resulting portfolio will have price-to-earnings ratio that is lower than its benchmark index and a return on equity that is higher than the index.
Core II Model Portfolio: The Core II (formerly Choice) model portfolio invests in the common stocks of U.S. based companies of all sizes but is concentrated in large and medium capitalization stocks. Starting with our Focus List, we select the securities of companies that have extremely strong qualitative characteristics. In some instances companies under consideration will not have made our Focus List because their quantitative measures may initially disqualify them from consideration. In spite of this we will add these companies because they have a compelling business model, have superior management, or have extremely bright future prospects. In most instances, these companies will have strong cash flow, high returns on equity, reasonable debt, strong competitive advantages and management that is shareholder oriented. While these companies may be considered traditional ‘value stock’ companies – low price-to-earnings, low price-to-book – they may not necessarily be so. Contrarily, many of the companies in the portfolio may be considered ‘growth stock’ companies. Great companies usually command high prices. We will not chase returns. The Core II portfolio will be made up of great companies that also meet our strict value requirements. We manage ONE all-cap portfolio: We do not think of the Core I and Core II model portfolios as separate portfolios. We mentally approach the management of our clients' funds as if we house them in one unified all-cap portfolio. In practice, we usher stocks of similar capitalization yet varying levels of risk to either the Core I or the Core II portfolio. This segmentation of the Core I and Core II model portfolios allows us the advantage of creating two portfolios with distinctive risk and return profiles. The benefit is that we are able to offer our clients various asset allocation choices. International Investments: Our preference is to avoid placing international securities in our Core portfolios. Simply stated, accounting standards are more uniform and domestic companies report their financial status more frequently. Our clients will however receive some investment return from international sources. Of the many companies that appear on our Focus List of stocks from which our Core portfolios are built, internationally generated revenues account for a significant portion of total revenues. Additionally we invest in internationally based ETF funds in our Balanced portfolios. Portfolios: Balanced >> Wealth Management >> | 
