LargeCap Value
Description
Westwood's LargeCap Portfolio invests in approximately 40-60 well-seasoned companies with attractive valuations. The portfolio team seeks high quality companies with prospects for future profitability that are significantly stronger than are reflected in the current stock price.
Companies that produce ample levels of free cash flow and maintain relatively low levels of debt are preferred. Portfolio risk is controlled by limiting the target weight of each holding, imposing maximum position limits and limiting sector weightings to a predetermined percentage of the portfolio's market value. The beta of the portfolio is typically less than that of the benchmark.
Process
Purchase Discipline
Analysts focus on ideas that have limited downside risk and the opportunity to generate earnings/cash flows that are higher than what the current stock price implies. Companies are closely monitored and factors considered in analyzing securities include:
- Improving ROE (return on equity)
- A declining debt/equity ratio
- Positive cash flow
- Positive earnings surprise without a corresponding increase in Wall Street earnings estimates
The sell discipline is essential to controlling portfolio risk and includes:
- Stock achieves final price objective
- Fundamental change in company or industry that negatively impacts original investment thesis
Composite Performance
More Information
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