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Our investment management services are predicated on our belief that the most
reliable methods of fundamental research are based on facts rather than
forecasts. We pay close attention to a company’s revenues, trailing
earnings from operations, dividends, return on equity, and balance
sheet. To us, forecasted earnings by Wall Street are only opinions;
dividends and reported operating earnings are facts.
STOCK SELECTION
The
key to producing strong returns begins with stock selection. At Groesbeck,
we use a variety of sources to conduct stock research and generate
investment ideas. Electronic research is conducted through use of the
Internet, computer screening of financial databases, and a variety of
websites devoted to the stock market and equity research. In addition, we
use the equity research web capabilities of some Wall Street brokerage
houses. We do our own homework on securities under consideration and those
already owned.
In looking for investment candidates, we focus on the
equity securities of companies that have the following characteristics:
- Strong sales and earnings growth
- Consistent annual growth trends
- Sound balance sheets
- High returns on equity
- Good long-term financial track records
- Market leadership with growing market share
- High trading liquidity
- Reasonable valuations on an absolute and relative
basis
PORTFOLIO CONSTRUCTION
& MAINTENANCE
Once we have
found stocks that meet our investment criteria, we then build fully
invested portfolios consisting of 30 to 40 stocks, diversified across a
broad spectrum of industries. Positions are routinely rebalanced in order
to prevent any one position from becoming top heavy. Moreover, we also trim
positions as they become fully valued and seek to replace them with more
moderately valued stocks. By continually monitoring portfolios and
constantly seeking new stock ideas, we create portfolios that remain
vibrant. At Groesbeck, we do not engage in any “fad” investing,
short-term trading, market timing, derivatives, or short selling.
SELL DISCIPLINE
Just as stock
selection and sound portfolio maintenance are necessary to achieve strong
returns, a sell discipline is equally important. In monitoring our clients’
portfolios, we sell stocks that exhibit the following characteristics:
- Slowing sales growth and earnings growth
- Poor earnings prospects
- Declining margins
- Diminishing fundamentals
- Slowing dividend growth or reduction of dividends
- Overvaluation
In summary, our
disciplined approach assures that we remain fully invested and that we seek
to own quality companies whose earnings are growing and which should provide
higher-than-market stock price appreciation over the long haul. Our
investment process also results in portfolios with relatively low turnover
and minimal tax implications. We remain committed to our investment
process and to providing excellent client service.
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