Equity Approach

Our equity investment process research is driven by:

	Quality screening
	Analysis of growth

To control risk and improve return we:

	Calculate the theoretically proper valuation of individual stocks.
	Confirm a company’s growth prospects through corporate analysis.
	Diversify across market sectors.

Because we manage money for others, we must first assure financial quality and market liquidity in the companies we consider. To that end we initially screen out companies with debt greater than half the total invested capital and companies whose market capitalization is less than $750 million.

We apply our valuation model to the remaining universe in order to determine the relationship of a stock’s price to its underlying value. Over any short time period, a stock’s price is affected most by supply and demand - a complex mixture of emotion, cash flows, economic and political news.

A stock's price moves much more quickly and more often than its value. But throughout history stocks, which are underpriced relative to a theoretically proper valuation of their growth have eventually risen to their fair value.

It is not likely that mere mortals can repetitively predict which stocks or industries or sectors are most likely to rise through fair value at any particular time - or which will have unexpected troubles. Thus we diversify portfolios across the economy, paying attention to how sector weightings in our managed portfolios compare to weightings in broad market indexes.