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Equity Management
Pavlic Investment Advisors Inc. creates a balanced portfolio that invests the right percentage of your wealth in stocks, bonds and REITs depending on each client’s specific goals. Specifically for stocks, our ultimate goal is to grow your net worth through prudent equity management by investing in growth stocks with sustainable competitive advantages trading at reasonable valuations.
Prudence
We focus on investing in quality companies with both growth and value characteristics whose stock prices we believe are undervalued using a systematic, disciplined investment process. We focus on large and mid-sized companies across all sectors. We assign each stock the following:
- Value Score: Ranks stocks on nine key characteristics, then ranks each stock’s valuation relative to its own history, growth rate, and peers.
- Earnings Expectations Score: Ranks stocks based on earnings surprises, earnings revisions, revision breadth, and deviation from normalized earnings.
- Growth Score: Ranks stocks by a weighted average growth rate in cash flows for each company. This growth rate is a combination of a five-year expected growth rate and a normalized historical growth rate.
Once these values are known, we conduct trend analysis to make sure the price chart aligns with our fundamental analysis. A great company isn’t always a great investment. We look for evidence that either a stock is establishing the reversal of a downtrend or is in a defined uptrend before buying.
Performance
The performance objective of our core equity strategy is to outperform at least three of the four broader market indices—namely the Dow Jones Industrial Average, the S&P 500, the Russell 2000 and the NASDAQ. We manage our stock portfolio in a “core style,” meaning we invest in 25-40 mid and large cap stocks with both growth and value characteristics diversified across all major sectors. Our portfolio managers continuously monitor the performance of our stock portfolio and sell stocks that break our original investment theses. More specifically, we consider selling stocks when they rank poorly in our scoring system, their price has fallen 15% from purchase, or price trends are reversing. We believe the key to earning above-average returns over the long term is sticking to a disciplined investment strategy for both buying and selling stocks.
Integrity
Integrity is paramount in this industry. From our ultra-transparent fee disclosure to communicating with clients the winners and losers in our portfolio, we are honest and transparent in everything we do. No portfolio is properly diversified unless there is a position that is not working in the portfolio, and we openly discuss what is working along with what isn’t working. Integrity has been the premier building block of the long term, multi-generational relationships we have with clients, and integrity will continue to be the integral pillar of our business in the future.
Invest With Us
We would love to start a conversation with you to see how we can help.