Large Capitalization Equity Assets

Large Capitalization Equity

A Large Cap Equity Asset profile can change over time, and a company that matches an investor’s goals can fall outside of that investor’s criteria. In addition to adjusting recommendations to coincide with an investor’s dynamic profile, our wealth advisors watch assets within each investor’s portfolio for separation of intrinsic value in relation to market price and adverse changes in a company’s fundamentals and financial profile. We also work to maintain investment diversity by verifying that no one asset comprises an outsized portion of an investor’s portfolio.

We use our proprietary fundamental research methodologies to analyze:

A company’s management, including management experience, turnover, and profit incentives;
Its public strategy, short- and long-term financial stability, and industry prospects;
Pent-up demand, demand for products and services, and ability to maintain and improve profits and earnings through economic cycles;
Potential for unrealized value and ability to harness tools to tap that value;
Market price in relation to earnings, book value, cash flow, and gross sales.

Large Capital Growth

Banc Star Financial’s research specialists focus on two criteria to identify large cap equity assets that demonstrate a strong potential for capital growth: industry sectors that react and move in concert with economic cycles, and large cap companies in those sectors that reflect growth and expansion that runs contrary to those cycles. Wealth advisors who invest in conjunction with the crests of these cycles can miss strong growth opportunities by focusing only on companies that are at the beginning of an earnings cycle.

Our advisors and research specialists delve deeper to find companies that are extending their earnings cycles and that have discovered how to maintain earnings when competitors are retrenching for the next cycle. Market prices typically decline as other investors shift assets out of these companies. Our team looks to add alpha and to make recommendations that generate capital growth and excess value with these opportunities.

We start by defining the characteristics of the large capital growth assets that would be an ideal fit for a client’s portfolio. We take a disciplined and creative approach that reviews broad market sectors to identify those assets. We use our proprietary quantitative tools to make objective recommendations that are not skewed by subjective biases or temporary market cycles and corrections. We finalize recommendations only when a lead wealth manager for a client’s account is satisfied that our research professionals have applied their independent judgment to evaluate the assets that we identify with this process.

In every case, the client makes the final decision. We give our clients access to the results of our quantitative tools and our analysis, thus enabling the client to develop a portfolio that balances rewards with the client’s tolerance for risk and desire for diversification. As with all of our recommendations, we seek large capital growth opportunities that present a strong potential to run counter to negative or cynical market expectations.

Value

Our equity value investing strategy seeks to identify companies that are undervalued, but have consistent strong fundamentals. The market prices of these value-drive assets are discounted, presenting investors an opportunity to ride a wave of value appreciation as those companies become more prevalent on the marketplace radar.

Our process for identifying equity assets with strong value potential includes:

Fundamental research by our experienced wealth management team to identify companies with unwavering strategies, long-term financial stability, and an aggressive posture in their respective industries;
Identification of triggers that have a strong potential to release the companies’ hidden value;
Valuation criteria that analyzes market price in relation to estimated earnings, book value, cash flow, and actual and projected sales.

No value investing strategy is complete without criteria that define when to sell an equity asset to realize optimum value appreciation. We create formulas that provide early notice of the reduction in value in relation to asset price appreciation and that look for adverse shifts in a company’s fundamentals. We also recommend maintaining a well-balanced portfolio and will suggest reducing any holdings that are disproportionate to other portfolio investments. In all cases, we consult with our clients to identify the most attractive value opportunities available, and we advise clients to avoid emotional attachments to value-driven assets that might preclude shifting investments into more attractive opportunities.

Equity Income

Our equity income investment strategies present dual opportunities for our investor clients to realize steady cash flow and long-term equity asset growth. Our equity income recommendations go beyond common stocks, and encompass convertible bonds, convertible preferred stocks, real estate investment trusts (REITs), and other domestic and international equity assets.

Our wealth managers utilize our quantitative analytical tools and their experience in qualitative research and analysis to identify equity income assets that satisfy certain criteria:

Internal rate of return, yield, and steady or growing dividends that reflect performance that matches or exceeds major market indexes;
Combined yield and growth in valuation that exceeds certain defined annual minimums;
Dominant corporate positions in sectors that are steady or expanding;
Stable cash flow with growth potential as a function of the company’s book or intrinsic value;
Management that serves shareholder needs first.

Our sell strategies for equity income assets are similar to strategies we have adopted for other equity investments. We recommend moving out of an equity income position when the price of the underlying asset exceeds a ceiling that we have identified as being unsustainable. This situation occurs, for example, when a company has achieved its highest potential valuation and its fundamentals begin to show signs of weakness. We also look for more attractive opportunities as they arise in the marketplace and recommend portfolio adjustments to prevent any one asset from representing an outsized portion of a portfolio.

Large Cap Core

Investors that seek to hold large capitalization equity assets as the core component of their portfolios will benefit from our aggressive stock-selection model that seeks to add alpha to a portfolio with disciplined investing and equity assets that meet the client’s unique goals and requirements. Banc Star Financial’s large cap core wealth managers use their market knowledge and years of experience to give our clients a reliable and unparalleled equity stock selection process that pools multiple large cap stocks into a core of strength and value that forms the foundation of a strong portfolio.

Our wealth managers focus on two primary truths about the markets when they identify large cap core assets for our clients:

Cyclical movements are inevitable in markets, industry sectors, and individual companies; and
A majority of investors follow price trends without considering the near- and long-term effects of business, industry, and company cycles.

These realities enable our research specialists to select large cap opportunities that are poised for capital appreciation before the market and the majority of investors jump in to realize gains from that appreciation. Our recommendations have a goal of creating excess returns in the core component of a client’s portfolio with objective asset selection that shuns a trend-driven approach.

Our quantitative research tools first locate those companies that are at the front end of a rising cyclical trend. Those tools look at a massive store of data to compare cash flow, earnings, sales, management expertise, strong fundamentals, and internal stability. The large cap equity assets that survive our initial quantitative research and selection process are then analyzed by a large cap research team that adds a final human touch to that process. We forward research results to our clients, who then have an opportunity to review those results with their wealth management account leader.

Investors that form their portfolios around a large capitalization core strategy need to balance the risks and rewards that are inherent in that strategy. We help them to accomplish this with early identification and grading of all major risks confronted by each investment, and by creating structures that pull investors out of large cap assets that have achieved their maximum potential. At all times, our team works to identify better opportunities that can continue the large cap core strategy in an investor’s portfolio with minimum disruptions.