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Investment Discipline
*Value equities offer superior risk-adjusted return opportunities
*Focus is on the best companies within value universe
-Superior financials
-Strong competitive position
-Shareholder oriented management
*Fundamental equity and cash flow analysis necessary to identify value
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Investment Process
*Fundamental cash flow and credit analysis utilized to identify value
-Screen for companies selling at discount to market (P/E and P/CF)
-Identify superior companies
-Assess free cash flow generation capability and debt burden
-Create bull/bear case to determine risk/reward potential
-Review technical support/resistance levels
*Supplement investment research with company visits, management interviews and industry conferences
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Buy Discipline
*Catalyst Driven
*Positive operating fundamentals or catalyst must be present
-Improving Orders
-Increasing Margins
-Improved Cash Flow Generation
-Accelerating Earnings
-Management Change
-Insider Activity
-Trading Opportunity
*Timing Critical
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Sell Discipline
Sell/Reduce Equity Investment when:
-Risk/Reward becomes less favorable
-Target achieved -- technical and/or valuation based
-Business fundamentals deteriorate
-Loss limit reached (absolute or relative to market)
-Purchase puts and sell covered calls to reduce performance risk
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