Large Cap Portfolio
The investment objective of our Large Cap portfolio is to seek a positive total return by investing in solid companies priced at attractive levels, both to the underlying companies’ fundamentals and to the industry and overall market as a whole.
PIMG’s Large Cap process begins by screening stocks traded on U.S. markets to highlight outstanding businesses. Companies are limited to those with a market capitalization of $5 billion or higher. We further narrow the universe of publicly traded stocks to a list of potential candidates with rankings based on the fundamental factors we emphasize:
QUANTATATIVE:
- Significant profitability as measured by high returns on equity and assets
- Sustainable profitability as reflected by continuing earnings growth
- Solid balance sheet
- Attractive valuations relative to their peer group and the overall market
QUALITATIVE:
- Solid management team
- Strong business model
- Conservative debt-to-capital ratios
- Level of management ownership
In order to protect against wide fluctuations in account value, we work to construct portfolios that are well diversified across approximately 30 positions. However, we believe certain market sectors perform better than others at distinct points in each business cycle. As a result, specific sectors may be over- or underweighted but usually will not exceed two times the benchmark sector weighting. The maximum exposure to any individual security is generally a 5% position. Portfolios tend to be fully invested.
A sell discipline is equally important in the management of a client’s portfolio. Essentially, when a company falls outside the parameters that made it a buy candidate, the stock will be considered for sale from the portfolio.