Large Cap Value Investment Philosophy

• Underappreciated businesses with strong fundamentals
• Opportunity for price appreciation and dividend income
• Concentrated portfolio
• Establishment of upside and downside targets

Large Cap Value Investment Process

Initial Screen

• Market capitalization of $5 Billion and over at purchase
• Proprietary model screens on fundamentals and valuation
• Established and consistent earnings growth profile
• Dividend Yield
• Price to Earnings (P/E) ratio less than S&P

Ranking Process and Final Review

• Companies ranked on characteristics relative to sector and benchmark: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Return on Equity, Dividend Yield, Debt to Capital
• Relative stock performance
• Better than average S&P Quality Ranking
• Examine current events
• Review by team before purchase

Portfolio Construction

• New securities purchased into the portfolio at 3-5% position size
• Sector exposure actively managed relative to Russell 1000® Value
• Concentrated portfolio of up to 25 holdings
• P/E ratio less than market

Sell Discipline

• P/E target discipline - stock sold when P/E expands 20-25%
• Additional reasons to sell include deteriorating fundamentals, adverse company news or regulatory issues, or to make room for a new stock purchase
• Pare backs when position overweighted relative to strategy
• Downside maximum price protection (20%)