Investment Thesis: Investing in Large-Cap U.S. Equities

Overview:

Investing in large-cap U.S. equities provides an attractive opportunity for long-term growth, stability, and diversification within a portfolio. Large-cap companies, generally defined as those with market capitalizations above $10 billion, represent some of the most established and financially resilient firms in the world. These companies dominate their respective sectors, benefit from competitive advantages, and offer investors the potential for strong returns, particularly in a growing or stable economy. Example stocks: Goldman Sachs, American Express, Pfizer, Lockheed Martin, Coca Cola, Progressive, Etc.

Key Drivers of Our Thesis:

1) Stable Earnings and Dividend Growth

2) Strong Balance Sheets and Access to Capital

3) Market Leadership and Competitive Moats

4) Resiliency During Market Downturns

5) Technological and Innovation Leadership

6) Geographic and International Market Diversification

Investment criteria/things we look for in companies to buy:

1) Net Margins greater than or equal to 10%+

2) Return on Equity greater than or equal to 10+%

3) P/E multiples below 30

4) History of positive sales growth and projected positive future sales growth (sustainable growth rates)

5) Companies with low to manageable debt

6) Companies with a competitive moat

7) Revenue diversification

8) Quality earnings

9) Consistent share repurchase activity

10) Quality Management teams

11) Companies in industries that are investable and not high risk

We employ a comprehensive approach that integrates fundamental and technical analysis, strategic asset allocation, and thematic investing, all within the framework of large-cap U.S. equities. This multifaceted strategy is designed to effectively manage risk while attempting to drive positive alpha. We try to follow the saying: “Be fearful when others are greedy, and be greedy when others are fearful”. We look for strong long term buying opportunities like 2000-2002, 2008, 2011, 2015, 2018, 2020, 2022, and 2025. These big corrections and down turns give our firm the chance to buy great companies and the market at bargain prices.

We utilize a variety of strategies to effectively time market entries, including:

1) Moving Average Crossover Strategy: This approach helps identify potential buy and sell signals based on the relationships between short-term and long-term moving averages.

2) Dollar-Cost Averaging: We gradually build positions over several weeks or months to mitigate the impact of market volatility and reduce the risk of poor timing.

3) Experience: Our team's expertise in market trends and behavior guides our decision-making process.

While it’s impossible to predict the exact bottoms of market sell-offs, we leverage these strategies to identify optimal entry points. Our approach emphasizes 95% fundamental analysis, focusing on the intrinsic value of investments, while the remaining 5% (technical analysis) is dedicated to establishing strategic entry points. This dual focus ensures that you can achieve the best possible buy-in at favorable prices.

Risk Management Approach

We employ a comprehensive range of strategies and inversely correlated assets to manage equity risk effectively. These include the use of options, fixed-income securities, commodities, stress testing, scenario analysis and risk modeling. This diverse approach allows us to manage client portfolios with both safety and efficiency, adapting to changing market conditions while aligning with client goals.