Prudently managing your investments
We seek to purchase investments at an attractive value but will not invest in declining or poor-quality businesses just because they are cheap. Likewise, we will attempt to avoid investing in what we believe to be fads or speculative securities, no matter how exciting their short-term return potential may appear to be, and will encourage our clients to avoid them as well.
We rely on our own analysis, and models, not on the opinions of other brokerage firms. Helping clients stick with quality long-term investments during troubled times and avoid speculative investments during frothy times is key to our value proposition.
Our goal is to invest only in businesses of enduring value, those great American companies that show promise to grow in underlying value over time while also being in a position to survive inevitable market downturns and hopefully thrive in the recoveries. We rely on our own analysis and quantitative models, not on the opinions of other brokerage firms.
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Substantial growth potential over the next 5-10 years
Profitable growth is a key component in any business’ value proposition and enables an investor to benefit from value accretion over time. While it is also possible to extract value from speculative or even declining businesses, those strategies typically require a more short-term trading orientation in order to extract the value. Furthermore, any potential profits tend to be short-term and subject to higher tax rates, whereas long-term investors can defer taxes on a growing business’ potential compounding growth for years, decades, or even a lifetime.
Profitable reinvestment opportunities
Businesses that can reinvest profits and cashflow at a higher rate of return than the market offer outstanding long-term profit potential. Examples could be developing new products, opening new markets, acquiring small companies in the industry at an attractive valuation, and more. While some businesses were historically profitable, they may not have new investment opportunities that can earn a similar return. Earning a good return on a business without reinvestment opportunities relies on management’s willingness to return excess capital to shareholders.
Strong market position
A profitable company with a strong, defensible market position can likely maintain high returns for years or even decades, whereas a weak market position can turn a once-profitable company into a mediocre one over time. Market strength can come from a variety of sources: a high market share, scale, network effect, competitive structure, strength in niches, first-mover advantage, brands, patent protection and more.
Little or no debt
A very profitable company does not require much, if any, debt to sustain its business. Many businesses with little or no debt often throw off a significant amount of free cashflow, which can be used to enhance value. Furthermore, the capital strength of the businesses we focus on should allow them to weather market downturns, taking advantage of weaker competitors to gain market share and acquire rivals at bargain prices.
Intelligent use of capital
A great business allocates the capital it generates toward the most profitable uses, whether internal investment, strategic acquisitions, or returning capital to shareholders. Managements that waste capital in order to build empires or overpay for acquisitions can turn otherwise great businesses into mediocre ones.
Very few companies would be considered great businesses, but they are the ones that will likely generate the best returns over time.
Within the pool of what we consider great businesses, we strive to choose the ones that trade at the most attractive valuation, so that our investors may realize the full benefit of owning a piece of these businesses. After all, overpaying for a great business can turn it into a mediocre stock investment. But purchasing a great business at fair value can lead to better returns over time and potentially less risk of long-term value declines.
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Not all investors are the same. Each investor’s goals are distinctly theirs and reflected in their investment objectives – whether it’s capital appreciation, tax efficiencies, rising income or reduced volatility. That’s why we have a full array of specific investment strategies to address each objective. Here is a summary of each:
Principal and Income
A strategy using short-term bonds and inflation-protected securities to provide a measure of principal protection, generate income and help protect against inflation risks.
Income Focus
A balanced strategy consisting of a mix of dividend stocks and fixed income securities designed to maximize income while providing some income growth. Dividend stocks tend to focus on what are deemed to be high-quality companies with positive cashflow, little debt, and growth potential.
Equity Income
A strategy consisting of dividend stocks, which seeks to generate attractive current income and income growth over time. Dividend stocks tend to focus on what are deemed to be high-quality companies with positive cashflow, little debt, and growth potential.
Blue Chip Growth
A strategy consisting of what are deemed to be high-quality stocks with the goal of wealth accumulation over time. Focuses on stocks that seek to generate attractive returns on capital, growth potential and cashflow generation. These consist of the investments we believe have the best tradeoff between return potential and risk exposure among large and mid-cap stocks.
Dynamic Growth
A strategy consisting of smaller, growing companies with the goal of wealth accumulation over time. These companies tend to have strong returns on capital, growth potential, and cashflow generation. These consist of the investments we believe have the best tradeoff between return potential and risk exposure among small and mid-cap stocks.
Conservative Growth
A strategy consisting of stocks we believe exhibit a record of consistent sales and earnings growth, return on capital and cashflow. We seek companies with proven records and modest debt. The goal is to own companies we believe will grow in intrinsic value over time, and hold it for the long-term.
Any opinions are those of the Investment Manager(s) and their team and not necessarily those of Raymond James. Opinions are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security outside of a managed account. This should not be considered forward looking, and does not guarantee the future performance of any investment.
All investments are subject to risk, including loss. There is no assurance that any investment strategy will be successful. Asset allocation and diversification does not ensure a profit or protect against a loss. It is important to review the investment objectives, risk tolerance, tax objectives and liquidity needs before choosing an investment style or manager.