How We Invest

As value investors we seek to invest in high quality, undervalued stocks. As part of our research methodology, we assess each company’s intrinsic value by evaluating its business model and management and ascertaining its risks.

Our focused portfolio strategy relies on our deep understanding of each company in which we invest. Each portfolio typically holds between 30 and 50 stocks that are selected based on our assessment of the most attractive opportunities. Our concentrated approach seeks to outperform broad index strategies over time.

We invest for the long-term by identifying high quality businesses with superior management teams and attractive growth prospects. We believe these companies offer meaningful opportunities for patient investors. We take an active long-term approach using an opportunistic buy/sell discipline.

Our comprehensive research effort seeks to identify high quality businesses that are trading at significant discounts to intrinsic value.

Qualitative Analysis. We study each company to evaluate the overall quality of its business. Our process includes utilizing our network of industry contacts and analysts to paint a detailed picture of each company before making an investment decision.

Quantitative Analysis. Our objective evaluation of each company’s investment prospects examines factors including balance sheet strength, return on investment, growth rates, and valuation. We assess the intrinsic value of each company and then seek to invest at significant discounts to that value.

Our investment philosophy of identifying high quality businesses is an important component of our buy/sell discipline. Superior businesses grow over time, their intrinsic values rise accordingly. This discipline of owning exceptional companies dovetails with our long-term investment strategy and minimizes the need for turnover which contributes to portfolio tax efficiency.

Buy Discipline. Patience and conviction characterize our buy discipline. We take time to understand an investment before making a purchase. We typically build positions over time, but, when conditions warrant, we may move quickly. Market volatility creates unique buying opportunities. Following a sell-off, we may take advantage of depressed prices to initiate positions or add to existing positions.

Sell Discipline. When a stock appreciates to our target price, we review the investment to determine whether we should raise our target or sell the position. If a stock faces persistent selling pressure while its investment merits remain intact, we may use the opportunity to add to our position.

Trading. We do not utilize a separate trading department. Our portfolio managers control the entire trading process. This approach provides flexibility and the opportunity to respond to changing market conditions.

A key benefit of Pacific Global’s active investment management is our ability to manage for tax efficiency by tailoring investment decisions to each client’s tax situation.

Having a sell discipline is as important as knowing when to buy. Knowing when to sell and maintaining diversification are key to protecting gains and managing risk.

When we believe a stock reaches its growth potential, we sell to protect gains by realizing them and to rotate into better long-term investment opportunities.

We may sell to maintain diversification which manages risk.

We sell if our investment outlook for a stock significantly changes which may be based on changes in the company or headwinds in its sector or the economy.

“How do you know when to sell?“
Having an in-depth knowledge of our investments and a defined sell strategy is key to making good sell decisions.

Knowing our objective: Since we invest for the long term, we’re looking at a stock’s growth potential over 3-5 years.

Knowing the companies and their stocks: The foundation of our sell discipline begins before we ever invest in a stock. Our in-depth research process includes knowing a company in detail and evaluating its stock before we buy. Through that process we determine a stock’s growth potential and what purchase price represents a good value. Our analysis continues after we invest to maintain our understanding of the company and the stock.

Knowing the circumstances: Each sell decision is specific to the stock and the factors underlying our assessment of the company. We may gradually reduce a position over time or exit out of a position entirely.

Tailored Tax Efficiency
Managing tax consequences is an important part of our investment strategies and a key consideration of our sell discipline.

Long-term investing typically results in few short-term realized gains in portfolios.

We actively manage positions as they appreciate to maintain diversification and realize gains over time.

During the 4^th quarter, we make year-end adjustments and talk to clients with significant gains to understand their tax situation and consider options to reduce their tax liability. When needed, we can work with a client’s tax advisor to help coordinate investment and tax management strategies.

Our Tailored Approach

We use a personal, collaborative approach to design portfolios customized to your needs.

Using our broad investment management expertise, we:

Individually research and select the investments in your portfolio
Construct easy-to-understand portfolios that avoid complex instruments
Actively manage portfolios to respond to market opportunities

With a Pacific Global individually managed account, you benefit from:

Direct access to your portfolio manager
A tax-efficient strategy tailored to address your objectives
High quality, personalized client servicing

Our Investment Strategies

Equity holdings are typically concentrated in 30 to 50 value-oriented, high-quality stocks which are diversified across industries and sectors. Each portfolio is individually managed using our active buy-and-hold approach. This approach uses market volatility to opportunistically buy and sell while making longer-term investments to reduce portfolio turnover.

Fixed income holdings are managed for total return, which includes yield to maturity and capital appreciation. Investment decisions are based on our fundamental analysis of each issuer. We do not utilize aggressive strategies, such as leverage, or invest in high-yield (or ‘junk’) bonds or mortgage-backed securities. We adjust each portfolio’s maturity structure based on our interest rate outlook. When interest rates rise, we concentrate in shorter-term bonds to protect principal; when interest rates have peaked, we reposition to longer-term bonds for income and capital appreciation.

These strategies are best suited for investors seeking long-term capital appreciation with varying degrees of risk tolerance.

These strategies are best suited for investors seeking intermediate to long-term capital appreciation and income with reduced risk.

Portfolios are managed to provide long-term capital appreciation and principal protection. They contain up to 75% in equities, with the remainder primarily in investment grade corporate bonds. We determine the specific allocations based on overall economic growth prospects; our outlook on interest rates; and comparative rates of dividend versus interest income.

Balanced

These strategies are best suited for investors seeking short to intermediate-term income with limited volatility.

Portfolios are managed to provide principal protection and income. Investments are concentrated (50% or more) in investment grade corporate bonds and/or U.S. government and agency bonds. Fixed income holdings are typically supplemented by select blue-chip dividend-paying stocks which provide additional income and capital appreciation potential without significantly increasing risk. More importantly, equity holdings can provide stability by acting as a counterbalance to price movements in the fixed income markets.