Within the Public Equity universe, individual stocks possess widely varying characteristics and risk, and we believe that no one stock or class of stocks possessing similar characteristics (e.g., dividend yielding) is appropriate or desirable for every investor. In order to create a well-balanced equity portfolio that reflects individual clients’ investment profiles, we offer several diverse model portfolios. In each case, similar principles guide our investment criteria.

Our equity selection process is grounded on the following principles:

• We seek undervalued stocks using a proprietary quantitative economic model to try and determine a stock’s fair market value versus it’s relative value
• We avoid stocks that we consider speculative, risky, or possess poor business models
• We buy stocks that have defined "Moats" around their business

With respect to any stock purchase, we employ extensive research in advance of any investment decision. Our method is best described as Growth At a Reasonable Price (GARP). We believe the most successful long-term strategy is to buy and hold the stocks of companies whose value should grow at above average rates for the foreseeable future, provided we do not have to pay too high a price for such growth. To identify investment opportunities for our clients, our analysts and portfolio managers combine quantitative and qualitative analyses to identify what we think to be the best long-term investments available. Through a process of elimination, we reduce the universe of stocks to a manageable number of potential opportunities. We examine income statements, cash flow statements, balance sheets and other available data for insight into the true prospects of a business.

We then use a proprietary model to try and determine the stock’s fair market value. Using the fair market value we have calculated, we try and project the stock’s potential return. The stock must have a high absolute potential return and a potential return that ranks high within its sector. If it passes all of these tests, it will potentially be added to our portfolio.

Once a stock is added to a portfolio, our analysts continue to monitor it. We watch for changes in a company’s business and financial condition, its environment and its stock performance. We cease buying positions for new accounts when the potential return is less than 5% (projected by our fair market value estimate) or if a company’s business fundamentals have deteriorated. We sell positions when we assess that the risk is incommensurate with the potential return.

It is our sell discipline that is responsible for sales of equity positions. This discipline relates to observing or foreseeing a deterioration of one or more of the conditions we monitor or to unfavorable and unexpected corporate or environmental events. We also manage risk by reducing individual positions when they become too large in relation to the total portfolio. We are not market timers, and we anticipate holding most positions for periods of several years each. We anticipate that, on average, 1/2 of our positions will be changed each year, implying an average holding period of 2 years for each stock.

We believe that fixed income securities play an important and varied role in achieving our clients’ investment objectives. Whether an individual investor, corporation, pension fund, non-profit organization, or self-insurance trust, our fixed income management strategies are customized to satisfy the most fundamental investment needs:

• Asset and sector diversification of investment portfolios
• Predictable steady cash flow and income
• Liquidity of invested principal
• Effective risk/reward management

We emphasize the above attributes in all of our client portfolios regardless of whether their objective is balanced growth as a complement to our equity management style or exclusively fixed income oriented.

Investment Strategy
We offer a select variety of investment strategies:

• Taxable intermediate total rate of return
• Taxable enhanced current income
• Tax-advantaged total rate of return
• Tax-advantaged current income
• Taxable self-insurance trusts in accordance with stated investment policy

Regardless of whether Taxable or Tax-advantaged, we invest exclusively in higher quality bonds (Baa/BBB to Aaa/AAA). For tax-advantaged accounts we invest primarily in insured bonds with underlying credit quality of A or better. We maximize after tax returns by purchasing in-state municipal bonds not subject to the AMT (Alternative Minimum Tax) as appropriate. For taxable accounts we invest in Corporate bonds, Government Agency bonds, U.S. Treasury Notes/Bills, Taxable Municipal securities, and Mortgage-backed securities (if suitable). We diversify our Corporate bond obligations across various sectors and will over/under weight according to our valuation of each sector’s current and expected risk/reward profile.

Interest rate risk management and liquidity are also important considerations in executing our investment strategy. We are very focused on ensuring that there is an active secondary market for the securities that we purchase for our clients. Liquidity is not only important for providing cash when needed, but also to easily effect change of investment strategy when necessary. Since changes in interest rates are the biggest contributors to the market value of fixed income securities, we place a great deal of emphasis on economic analysis. We use a discipline that encompasses the more traditional economic indicators with our own proprietary macro-economic model so that we might better anticipate cyclical changes in interest rates. This enhances our ability to reposition the duration of our client portfolios to maximize returns.