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The Baker 500 Investment Process
Baker 500's asset management philosophy stems from the belief that earnings growth drives stock prices. To achieve our goals, we rigorously adhere to the Baker 500 Investment Process, developed by our founder, Ed Baker, in 1982. The Baker 500 Investment Process follows an investment philosophy that seeks long-term capital appreciation by investing in a focused portfolio of high-quality equities.
Bottom Up Assessment
The Baker 500 Investment Process is a disciplined and systematic approach which uses both micro and macro evaluations. The individual security selection process begins with a detailed quantitative screening process that evaluates each of the stocks listed in the S&P 500 Index. The result is a working universe of securities that qualify for inclusion in the portfolio. The group is further refined, using higher level screening techniques to produce a final target list of 40 to 50 stocks. Subjective criteria results in a focused portfolio usually comprised of 20 stocks, spread across 10-14 industries to achieve diversification.
Top Down Evaluation
Baker 500's evaluation of the macro-economic environment includes research from both internal and external sources. It is driven by the combination of fundamental and technical disciplines. The process over-weights the evaluation of the cyclical character of both economic and financial market behaviors. Key components include Federal Reserve policy as it relates to the growth of money and credit, the prospects for price stability, outlook for interest rates, macro-economic growth factors, as well as the prospects for specific market sectors, global economic conditions, along with other factors.
Buy and Sell Disciplines
Our buy decisions are based on earnings acceleration, price momentum, sustainable growth and industry leaders. Our sell decisions are based on several factors including: the stock price has peaked and declined 15-20%, when its industry does not; stock's growth rate has declined relative to industry or market; pre-earnings announcements; or another stock has become more attractive.
© 2009 Baker 500 All rights reserved.
All information and material is provided as a service to our clients and visitors. Opinions on future growth and development and claims representing past performance are not guarantees of future results.
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