US Large Cap Value
A conviction-based actively managed strategy that seeks value with a catalyst
- Fundamental, bottom-up, research-driven approach focused on identifying undervalued U.S. businesses with a catalyst for price appreciation
- Actively managed portfolio with an emphasis on avoiding "value traps"
- Disciplined risk management and sell discipline seeks to mitigate downside risk
Key Risks
Market Risk: The risk of a change in the value of a position as a result of underlying market factors, including among other things, the overall performance of companies and the market perception of the global economy.
Liquidity Risk: The risk that the portfolio may be unable to sell an investment readily at its fair market value.
Counterparty Risk: The risk that the portfolio may be unable to sell an investment readily at its fair market value.
Operational Risk: The risk of direct or indirect loss resulting from inadequate or failed processes, people and systems including those relating to the safekeeping of assets or from external events.
Currency Risk: Investments in a currency other than the base currency of the portfolio are exposed to currency risk. Fluctuations in exchange rates may affect the return on investment. If the currency of the portfolio is different from your local currency, then you should be aware that due to exchange rate fluctuations the performance may increase or decrease if converted into your local currency.
Overview
Investment Philosophy
Our core belief is that the opportunity exists to capitalize on discrepancies that are always present in the market. Accordingly, we look for stocks that are trading below where we think they should trade based on normalized earnings. Informed judgments of where the market should price stocks at "normal" values can be made by combining fundamental criteria with in-depth company research.
Over time, this approach has the potential to generate attractive total returns with less risk than the large cap value market.*
*Russell 1000 Value Index
Investment Process
- Identify attractively valued stocks with improving fundamentals that are not yet fully reflected in the stock price
- Identify catalysts that may help bring below normal earnings back to normal in 12–18 months
- Attracted to sectors that have been deprived of capital, and in turn deprived of capacity; avoid sectors that are overcapitalized and have created too much capacity
- A diversified portfolio of stocks that have positive fundamental outlook, attractive valuation, appropriate economic exposure and clearly defined risk parameters vs. the benchmark*
- Focus on mitigating downside risk using Barra tools, benchmark sensitivity and correlation of portfolio holdings and impact of new securities
*Russell 1000 Value Index
Management
Eli M. Salzmann
David Levine, CFA
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