Value Equity Strategies

Our value equity investment philosophy is a bottom-up, fundamental approach that seeks to generate above-average returns over the long-term by identifying businesses that possess substantial competitive advantages and are trading at discounts to our estimates of intrinsic value. Advantages may include strong brand names, highly differentiated services or products, dominant market share, flexible pricing power, protected technology or specialized industrial skills sets. Companies have the ability to generate high levels of cash flow and are led by management teams that are true stewards for creating shareholder wealth.

The investment process focuses on managing risk, which we define as the probability of a permanent loss of capital, by owning quality businesses at attractive valuations. This discipline strives to protect investors on the downside while enhancing upside potential. Over time, we believe that this approach positions the portfolio to deliver above-average risk-adjusted returns.

Value Equity Insights – Reports from the Value Equities Investment Committee
Quarterly Update – Video discussions reviewing the recent quarter

Equity Income

The Equity Income strategy is focused on businesses that range in market capitalization and collectively generate an above-average stream of dividend income, while also providing capital appreciation potential. The research process seeks to identify businesses that have the ability to either pay a high level of dividend income or grow the dividend stream over time. The portfolio typically comprises 30-35 holdings and is expected to result in low to moderate turnover. Equity Income is suitable for clients seeking total return from dividend income and capital appreciation.

Select Equity Income

The Select Equity Income strategy is focused on large-cap businesses that collectively generate an above-average stream of dividend income, while also providing capital appreciation potential. The research process seeks to identify businesses that have the ability to either pay a high level of dividend income or grow the dividend stream over time. The portfolio typically comprises 23-25 holdings and is expected to result in low to moderate turnover. Select Equity Income is suitable for clients seeking total return from dividend income and capital appreciation.

Increasing Dividend Equity Account (IDEA)

The Increasing Dividend Equity Account (IDEA) strategy is focused on high-quality companies with long track records of distributing earnings to shareholders through dividends. The portfolio is selected from a universe of stocks meeting minimum criteria of paying and/or increasing dividends over the last 10 years and have market capitalizations greater than $1 billion. Also of importance is the anticipated dividend growth rate of the aggregate portfolio. The portfolio has approximately 49 holdings and is expected to result in low to moderate turnover. IDEA is suitable for clients primarily seeking capital appreciation, with total return from dividend income as a secondary objective.

IDEA Plus

Increasing Dividend Equity Account (IDEA) Plus is a dividend-based equity strategy combined with a covered call option strategy on the S&P 500 Index. Approximately 75% of the portfolio is made up of the IDEA portfolio which invests in high-quality companies that have paid and/or increased dividends over the last 10 years. The remaining 25% consists of an ETF position in the S&P 500 Index with a corresponding covered call position. IDEA Plus is suitable for clients seeking total return with lowered risk and volatility than the broader equity market, along with capital appreciation.

Large Cap Value

The Large Cap Value strategy is focused on seasoned businesses that generally have capitalizations above $10 billion. The portfolio typically comprises 23-25 holdings and is expected to result in low to moderate turnover. Large Cap Value is suitable for clients whose primary objective is capital appreciation and whose secondary objective is dividend income.

All Cap Value

The All Cap Value strategy is focused on businesses that range in market capitalization. The portfolio typically comprises 30-35 holdings and is expected to result in low to moderate turnover. All Cap Value is suitable for clients whose primary objective is capital appreciation and whose secondary objective is dividend income.

Small Cap Value

The Small Cap Value strategy is focused on smaller businesses that generally have capitalizations below $3 billion at the time of purchase. The portfolio typically comprises 30-35 holdings and is expected to result in low to moderate turnover. Because small cap stocks are generally more volatile than large cap stocks, Small Cap Value is suitable for clients whose primary objective is capital appreciation.

Value Opportunities

Value Opportunities is a concentrated portfolio of businesses that range in market capitalization and have near-term (within 18 months) catalysts in which to unlock the value. The portfolio may have concentrations in both individual holdings and/or industries. It typically comprises 8-12 holdings and is expected to result in higher turnover of 75-100%. Value Opportunities is suitable for clients seeking an aggressive approach to generating capital appreciation.