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The Bush O’Donnell core growth portfolio contains fifteen to twenty large market capitalization growth stocks. We select companies that consistently grow earnings by more than 12% per year. We focus on industry groups that are conducive to consistent earnings, seeking companies with strong brands or leading market positions in their industries. While strong earnings are critical, we look at all of the financial statements. Companies in our portfolio have sound balance sheets that minimize direct credit risk for our clients while providing the company the flexibility to weather adverse circumstances.
Going beyond the financial analysis, we look for businesses we can clearly understand, run by a dedicated and experienced management team. This eliminates most future surprises, and gives us a fundamentally strong portfolio of businesses that are well positioned for future growth.
Finally, most businesses in our portfolio earn a large percentage of their revenues from international markets. This allows us to diversify our earnings around the globe, participating in the growth of developed and emerging overseas markets while avoiding the risk of fluctuating currencies.
We want to buy excellent companies and hold them for the long run. There are only two reasons why we would sell a stock; its future prospects have dimmed, or it has become overpriced. If the company fails to maintain earnings growth, its markets have shifted, or we have other reason to believe the earnings forecast is suspect, we will consider a sale.
Alternatively, we may still like a company that has enjoyed a strong increase in price, but equally like a similar company that is undervalued. If the difference in price is high enough, we would consider trading one company for the other.
We constantly evaluate our selected group of fifty to sixty companies for price disparities, changes in earnings outlook, or changes in business circumstance that could warrant a trade.
Our investment team relies on many sources of information including outside analysts, ValueLine reports, and the Baseline® Database. Baseline® is a comprehensive database that holds financial information on over 12,000 publicly traded companies. Its information is updated daily, giving us constant access to the latest on our portfolio and target companies. Baseline is a valuable screening tool for stock selection process. The following is an example of a typical baseline.
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