Mr. Stevens: We are an independent, employee-owned investment management firm with approximately 1.8 billion in assets under management. We have no affiliation with a broker-dealer and our client base is split evenly between institutions and high-net-worth individuals. Our investment philosophy centers on purchasing high-quality, industry-leading companies. These are companies that maintain durable competitive advantages, conservative financing structures and shareholder-friendly management teams. These companies are typically characterized by high returns on capital, strong free cash flow generation and solid balance sheets. We hold roughly 30 to 40 stocks in our portfolios. In most cases, we limit exposure to any one name at 5% of the portfolio. Our top 10 names in a typical portfolio account for about 40% of the total equity in the account.
TWST: Tell us about your top-down analytical process.
Mr. Stevens: We are both bottom-up and top-down investors. We are top-down from the standpoint that we have an economic expectation, and we want to focus our sector emphasis on those industries that should take advantage of that forecast. In the case of the current rebound, for example, we have been heavily weighted in economically sensitive areas. We've been considerably underweight the more defensive areas of the market that aren't seeing the same relative benefit from an economic improvement. The sectors we have been favoring are technology, industrials, materials and energy. These sectors will see improving demand as the economy expands.
Tickers included in this excerpt: ACL, CME, CTSH, CVX, GILD, GS, IBM, MMM, SLB
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