Large Cap Growth Portfolio Insights

The Large Cap or Growth Portfolio strategy combines a disciplined “top-down” analysis with a detailed fundamental, “bottom-up” security selection process. LCM’s top-down analysis aims to identify macroeconomic trends representing growth opportunities in the global economy. This macro analysis helps determine our internal growth rates for sectors and the companies within those sectors.

Various data sources are used to establish relative value expectations of growth sectors likely to benefit from these broad themes and outperform over the next 12 to 24 months. Growth sectors have higher potential revenue and profit growth than the US economy.

LCM’s top-down approach helps to focus the firm’s bottom-up security selection process on the Large Cap Growth sectors and industries identified by the Investment Committee. Portfolio managers identify securities from the S&P 500 and other sources consistent with the firm’s investment philosophy. The result of the analyses is a “watch list” of approximately 100 companies.

These stocks should possess some, if not all, of the following characteristics:

• Market dominance
• A superior operating record and balance sheet
• Projected growth rate greater than the market
• Reasonable price: defined as having a forward PEG less than that of the market

The Investment Committee will perform in-depth research on these companies to determine the ones to be included in the Large Cap Growth model portfolio. LCM’s fundamental research process incorporates the following inputs:

• “DCA” Analysis (Dominant & Competitive Analysis)
• Growth Factors
• Quality Analysis
• Valuation

LCM employs strict sell disciplines to protect its clients’ portfolios. Positions will generally be reduced or sold if a stock:

• Becomes overpriced
• Can be replaced with better risk/reward opportunity
• Changes occur that affect a stock’s fundamentals
• Position weight reaches 8%