Mr. Senser: Institutional Capital currently has about 14 billion in assets under management for institutional clients. The firm has been in business since 1970 and is located in Chicago. Our focus is large-cap value-oriented equity investments, and we manage domestic, international and global portfolios. We have a very experienced team of analysts who follow stocks on a global basis. We believe that it is especially important in the large-cap area to have a global perspective in order to understand competitors and recognize opportunities. Our investment process is a bottom-up approach that focuses on individual companies and stocks.
TWST: How has the firm fared during the last 12 months with the turmoil in the markets and the credit crunch and so on? Tell us how it affects your value style?
Mr. Senser: We recognized towards the end of 2007 that the global economy was slowing and believed that there would be some difficulties in the credit markets. We certainly did not anticipate the extent of the dislocation that ultimately occurred, but we did adopt a strategy of looking for companies with strong balance sheets, good cash flows, good risk management practices and strong competitive positions. This strategy significantly benefited the portfolio in 2008. This was particularly true in the financial sector where we emphasized companies with those characteristics and were able to avoid many of the traps that negatively impacted performance.
Early this year, we significantly reoriented our portfolio positioning. We did this to reflect attractive valuations that were available in the market and early signs that economic conditions were improving. We increased our holdings of financial, capital goods and technology stocks and reduced positions in areas like health care and consumer staples.
Since we adjusted our portfolio strategy in March, the data have bolstered our view that the economy is recovering. The recession is now either over or close to an end. The stock market gains from the lows in February, in part, reflect this realization. We believe that economic improvements will continue to build and think that investors may be surprised by the strength of the economy over the next 6 to 12 months.
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