Why we do what we do.

Our objective is to identify top quality companies that are dominant market leaders trading below their projected fair market value and hold them until their value is fully realized.

Our objective is to provide guidance to a variety of fixed income asset classes and to set parameters regarding securities restrictions and prohibitions. Fixed income purchases must meet such criteria as:

• Liquidity and marketability
• Acceptable risk/return tradeoffs
• Adherence to duration, yield curve and sector guidelines
• Appropriate structure given the tax status of the client

In selecting funds, we use a combination of quantitative screening and qualitative analysis that focuses on returns, risk, style, style drift and portfolio structure. Our qualitative analysis involves manager interviews to evaluate the investment team and the quality of the investment process.

Are managers who specialize in one particular style at all times. For example, there are a number of very highly regarded managers who use only U.S. domestic stocks in their investment portfolios. Some use only foreign stocks. Still others specialize in global, fixed-income or distressed debt portfolios. There are numerous style classes.  Many of these single-style managers can do quite well for their clients when their particular style is in favor, but may also do very poorly when its style falls out of favor.

Are managers who feel it is imprudent to use the same investment style at all times (i.e., single-style managers), but also feel it is difficult-to-impossible to outguess the markets on a long-term basis (i.e., portfolio strategists). Multi-class managers, therefore, tend to take a more conservative “in-between” approach. In other words, they prefer to use some combination of asset classes (cash equivalents, bonds, stocks and alternative investments) in their portfolios. Portfolios are customized for each individual client, depending on that client’s time horizon, risk tolerance, income requirements and other factors. Multi-class managers tend to assume much less risk – albeit sometimes at the cost of a lower return – than either single-style managers or portfolio strategists

Are managers that tend to take large “bets” in particular securities, industries, countries or strategies. This style includes many hedge funds as well as so-called “market timers.” Portfolio strategists can, theoretically, switch from 100% in stocks to 100% in cash and back again in a relatively short period of time.  Or, they may make large wagers regarding corporate takeovers, reorganizations, leveraged buyouts and/or mergers. Portfolio strategists can do extremely well for their clients when their outlook or strategy is correct. On the other hand, the investment results can be disastrous if they are wrong.

Also known as cash alternatives, refers to assets that can be accessed immediately or near-immediately and are relatively stable in value. Examples of cash can include money market funds, certificates of deposit, U.S. Treasury bills, commercial paper, banker’s acceptances and repurchase agreements.

• Large Cap: Large cap refers to companies with a market capitalization of more than $10 billion. Market capitalization is calculated by multiplying the number of a company’s shares outstanding by its stock price per share.
• Mid/Small Cap: Mid cap refers to companies with a market capitalization of $2 billion to $10 billion. Small cap refers to companies with a market capitalization of less than $2 billion.
• Developed International: Developed international refers to stocks issued outside of the U.S. in countries that are the most developed in terms of their economies and capital markets. Characteristics of these countries include relatively high per-capita income, openness to foreign ownership, efficiency of market institutions and ease of capital movement. Examples of developed international countries would be Canada and such Western European countries as England, France and Germany.
• Emerging Markets: Emerging markets refers to stocks issued outside of the U.S. in countries characterized as being vulnerable to economic and political instability, having low per-capita income and of being in the process of building its industrial and commercial base. For the most part, these countries tend to be in Eastern Europe, Africa, the Middle East, Latin America, the Far East and Asia.

• Treasury/Agency: U.S. Treasury securities are direct obligations of the U.S. government and are therefore considered to be risk-free. Agency securities, on the other hand, are simply obligations of U.S. entities and do not have specific government backing. They are, nonetheless, viewed as being extremely low-risk.
• Tax-Exempt: A tax-exempt (municipal) bond is issued by a local U.S. government or agency entity. The interest from municipal bonds is exempt from federal income tax. In most states, income from municipal bonds is also exempt from state and local taxes.
• Corporates: A corporate bond represents a debt obligation from a specific U.S. company. Corporate bonds are considered higher risk than government bonds. Therefore, the interest rates from corporate bonds are almost always higher than from government securities, regardless of the soundness of the company.
• TIPS: Treasury Inflation-Protected Securities (TIPS) are considered very low-risk investments since they are backed by the U.S. government. Their par value rises with inflation and falls with deflation – as measured by the Consumer Price Index – while their interest rate remains fixed.
• High Yield: A high-yield bond is rated below investment grade. They have a higher risk of default, or other adverse credit events, than better-quality bonds. However, they typically pay higher yields to make them more attractive to investors.
• Mortgage Backed: A mortgage backed security (MBS) is a type of security that is backed (secured) by a mortgage or pool of mortgages. Also known as a “pass through” security, the principal and interest from the borrower (home buyer) passes through to the MBS holder.
• International: International bonds are issued in counties outside of the United States. Like most U.S. bonds, they pay interest at specific intervals, and the principal is paid back to the bond holder at maturity.
• Senior Floating Rate: Senior floating rates are bonds that have a variable coupon equal to a specific money market rate (i.e., LIBOR or fed funds rate) plus a quoted spread. The spread is a rate that remains constant.

• Real Estate: Securities of real estate and real estate-related issuers around the world. These investments are done primarily through real estate investment trusts and equity securities.
• Hedging Funds Replication: Without investing directly in any hedge funds, hedge fund replication seeks to deliver consistent long-term portfolio returns with minimal volatility by taking market exposures (futures contracts, passive equities, currencies, etc.) that approximate the return and risk characteristics of the hedge fund universe as a whole.
• Hedged Equity: Also known as buy/write strategies, hedged equity seeks to achieve equity exposure with significantly reduced downside risk. As such, a fund will sell call options in an effort to reduce volatility and provide for steady cash flow, while also purchasing protective put options to limit losses on its very diversified portfolio of large cap domestic equity positions
• Strategic Income: This segment is designed to take advantage of unique discounts or opportunities/situations in the fixed income space.
• Infrastructure: This segment seeks long-term, defensive, low volatility returns that exceed inflation by investing in global equity securities that the manager classifies as “preferred infrastructure” (utilities, pipelines, toll roads, airports, railroads, ports, telecommunications, etc.).