Approach to Company Selection.
At GeoVest, we try to understand the companies we invest in as if we are managing them. We believe that when you think like an owner, you are more aware of opportunities and threats than if you rely on such passive variables as valuation and Wall Street recommendations. We look for management that has proven operational skills, the strategic vision to leverage these skills, and the incentives to make difficult decisions that are in the best interests of shareholders.
We also look for assets and potential assets that are not widely recognized by the stock market. These may include patents for emerging products, distribution channels in fast growth regions of the world, and competencies that are unlikely to be duplicated by competitors.
In-Depth Fundamental Analysis
We combine a thorough analysis of a company’s financial statements with proprietary industry models, a proprietary analysis of a company’s products, and macroeconomic analysis to determine a company’s risk profile and its prospects for stock market outperformance.
Universe
The GeoVest universe includes large capitalization companies and selected smaller capitalization companies that we expect may appreciate to a size where they will be eligible for inclusion in the S&P 500, and selected American Depository Receipts (ADR’s). We limit our selection of ADR’s to companies which are located in countries where our outlook for the country is positive.
Styles
We offer two basic styles of investment, value and growth, to fit the individual needs and risk preferences of our clients. Both approaches strive for capital appreciation within acceptable risk parameters.
Value
The value approach combines a strong consideration for preservation of capital with a goal of outperforming the S&P 500. The types of stocks that are typically purchased in our value accounts include large capitalization growth stocks that have experienced a temporary correction due to some form of uncertainty, stocks in attractive industries that are trading at discounts to their peers, and cyclical stocks that are out of favor, but which have improving prospects for price appreciation.
Growth
With our growth approach, we look for companies where we expect earnings to grow at a faster pace than the average stock in the market. Our growth portfolios will generally have large positions in fast growing industries such as healthcare, technology, and communications. Other industries such as financial services, natural resources, and consumer companies will be represented in the portfolio to the extent that they will benefit from our macroeconomic and demographic expectations. This approach leads to greater volatility of returns when compared to the value approach, but we expect this portfolio to offer greater returns in the long run.
For growth stocks, we sell our positions when the fundamentals of the company change, or when we believe there is a strong probability that the fundamentals will change in the future.
