Investment Process

Although describing a typical account can be misleading, accounts often have both equity and fixed income components, as determined by client needs. We do not consider cash to be an attractive investment except for liquidity and "safe harbor" purposes, so we tend to be fully invested in stocks and bonds. Accounts range in size from $500,000 to $15,000,000. Depending on the client's needs, the typical account is invested from 55% to 100% in equities, seeks appreciation of capital as the primary objective, and has income generation as a secondary objective.

Equity

As a core equity manager with a growth at a reasonable price (GARP) style, WealthTrust • DunckerStreett builds diversified portfolios of stocks which can be either growth or value and either large-cap or mid-cap. Aggressive growth (such as momentum, early stage, or high P/E stocks) and deep value (such as commodity or turn-arounds), however, are generally avoided.

The process begins with a qualitative assessment of a company that appears to have attractive growth prospects. Factors such as management, business plan, industry position, and product lines are evaluated. Strategic dynamics between the company and its competitors, suppliers, and customers are considered as well as secular and cyclical trends within the industry. Once a buy candidate has been identified, quantitative tests are applied to determine if a security is attractively priced. Traditional fundamental measures of valuation, profitability, and growth are examined. A sophisticated cash flow return on investment (CFROI) and asset growth analysis is undertaken to investigate true corporate performance and assess the fair value of the stock. Companies that are leaders in growing industries with strong revenue growth and a high and rising CFROI are favored.

Securities are often sold when objectives are met, fundamentals deteriorate, a holding becomes disproportionately large, valuation reaches historical highs, or when a more attractive alternative is identified. Although holding periods may vary widely, and our best performing stocks are often held for long periods of time, it is frequently necessary to wait three to four years to realize the full potential of our initial investment thesis. Technical sell indicators may also be used. Capital gain considerations play an important role in the selling process for taxable portfolios. Average annual portfolio turnover is roughly 25%.