Investment Adviser Fundamental Research
Portfolio Construction
Once investments are identified, the portfolio is constructed under general weighting guidelines:
Sell Discipline
Leeb Capital Management Investment Adviser employs strict sell disciplines to protect clients’ portfolios. Positions will be sold if a stock:
Becomes Overpriced
Leeb Capital Management Investment Adviser does not use explicit price targets in the valuation of companies but instead relies upon relative valuation metrics, such as PEG. LCM views a sector and company’s value on a comparable basis per macroeconomic assumptions and will sell a position if the company’s PEG ratio is no longer less than the broad market.
Can Be Replaced With Better Risk / Reward Opportunity
Suppose an Investment Committee member believes another security can replace a current holding with better upside potential, a more favorable PEG, or a less risky profile. In that case, the company will be brought to the attention of the Investment Committee. We will talk about which position is better suited to the current strategy the firm is pursuing.
Changes Occur That Affect A Stock’s Fundamentals
The firm’s fundamental research does not stop once an equity security is included in the portfolio. This process also ensures that no adverse factors change the original fundamental case made for the stock’s inclusion in the portfolio. The position will be sold if one or more factors change and the stock is no longer fundamentally sound or likely to meet our expectations.
Position Weight Hits 8%
Under normal circumstances, Leeb Capital Management's investment process will only permit a position in a single security to be at most 8% of the portfolio. Once a position approaches this level, it will be scaled back. In the past, exceptions have been made for certain investments.
Price Depreciation
Portfolio managers regularly review stocks whose performance lags on both an absolute and relative basis. Any discrepancies in performance relative to a company’s sector and market- i.e., 20% underperformance on a 6-month trailing basis are immediately reviewed by our Investment Committee. The company’s PEG ratio will be adjusted accordingly if this depreciation is fundamental. If the resulting PEG is no longer attractive relative to the sector, then such circumstances warrant selling this position. The investment committee may decide to retain the position if the company’s fundamentals remain sound and its earnings and growth prospects remain intact.
Investment Strategy Communicated With Transparency
Leeb Capital Management Investment Adviser provides quality investment management services to individuals and institutions. Our steadfast track record began in 1999, with macro “thought leadership” and diligent research wisely guiding our investment portfolio management.
Communication is the key to successful client relationships.
Every client is held in the highest regard and investment portfolios are tailored to meet each client’s investment objectives.
Feel free to request a portfolio review to discuss performance.
