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Relative Value
Equity Investing

The relative value style of investing is a bottom up approach that seeks to take advantage of the temporary mispricing of securities which are out of favor or overlooked in the market place. Stocks often sell for more or less than their intrinsic long term worth. Investors' emotional response to current events or perceived risks or opportunities cause them to misprice stocks relative to their long-term value.

At Catawba Capital Management we invest in:
Financially strong companies
Companies with attractive valuations relative to:
   Normalized earnings
   Cash flow
   Asset value
Companies with superior growth of earnings and dividends
Broadly diversified portfolios

Portfolios of stocks managed in this fashion will typically have:
Below market price/earnings ratios
Below market price/book value ratios
Above market dividend yields


The investment process: quality - growth - value
Investing in financially strong companies is the hallmark of Catawba Capital Management's investment style. Every investment must pass the financial strength test to be included in the portfolio. Testing is done by Sentry, proprietary software developed specifically for our firm. This is a hurdle, a stop/go test. Using strong companies adds significantly to the credit quality and lessens the instance of adverse surprises.

The remainder of the process represents a tug-of-war between growth and value. The portfolio wins when we are able to acquire securities with above average growth rates, at low prices relative to earnings, cash flow, and asset value.

LEANR MORE ABOUT THE SENTRY INVESTMENT EVALUATION MODEL