“Scholtz & Company has geared its investment process toward generating alpha while taking on an appropriate level of risk.”
Consultants / Institutions
Scholtz & Company has geared its investment process toward generating alpha while taking on an appropriate level of risk. To achieve this goal, Scholtz & Company employs a variety of methods and techniques which have been utilized by our Portfolio Managers throughout their careers. Below we’ve laid out our basic investment objectives, equity characteristics, and sell discipline used to create our portfolios in simple bullet form.
Portfolio Objectives
- Preservation of Capital
- Portfolio volatility less than the S&P 500 (or appropriate benchmark)
- Above market growth potential
- Above market current yield
Stock Portfolio Characteristics
- Companies with strong franchises that have high competitive barriers to entry
- Companies with good relative earnings momentum and positive earnings estimates changes
- Stocks with strong relative price momentum
- Dividend yields greater than the S&P 500
- Good relative values: low P/E, low price to cash flow, low price to book, high ROE, and high dividend yield
Sell Discipline
MODEL DETERIORATION
- Loss of earnings momentum leads to gradual revision deterioration
- Stock appreciation and/or Balance Sheet changes cause erosion in value model
- Insider/Short sentiment becomes more bearish
FUNDAMENTAL SHIFT
- Negative quarterly earnings surprises
- Corporate or industry fundamentals change in a way that drastically affects the present value of the business model
- Unethical conduct or suspicion of fraud
- Credit quality deterioration of fixed income investments
TACTICAL
- Current price greatly exceeds our estimate of intrinsic value
- Relative stock strength becomes highly negative