New Selections
To assure clients portfolios are of enduring quality and value, we manage and control he risks of valuation, growth rate, credit, diversification, and liquidity. We subject the character of new recommendations against the characteristics of the established portfolio. New investment recommendations should improve a portfolio.
The Audit
We believe we should regularly audit equity portfolio characteristics relative to the market, to remain committed to and consistent with our objective of better value, quality, and better growth than the market benchmarks. In The Pooled Funds section, we disclose the current measures.
We apply the same audit processes for all equity capitalizations.
Equities
To increase the potential for a positive return and to reduce volatility in client's portfolios, QV manages the qualities or the character of our model, pooled fund portfolios. From the inception of QV Investors, we have "risk managed" both equity and fixed income portfolios, to provide governed results.
We do so to meet our commitment to invest in companies able to re-invest their cash flow at a better return than the market and which trade at better values or lower multiples than the market.
We measure and manage the characteristics of value, growth, credit, liquidity, yield, and diversification. We measure value by the traditional share price multiples of earnings, cash flow, book value, and sales and by the measures of enterprise value.
We use the return on equity, re-investment rates, and return on capital employed for our principal measures of return and growth. We supplement the return measures with the historic growth rates for sales, cash flow, earnings, dividends and invested capital.
Credit quality, we measure, through debt to equity and cash flow to debt, and coverage multiples.
As our pooled funds and strategies require liquidity, we invest and monitor the size of the company as measured by the size of the market capitalization and the float of our holdings.
Fixed Income
To meet our commitment to building fixed income portfolios of better quality and yield but of shorter or comparable term to the benchmarks, we measure the quality, issuer, term, duration, and yield of the portfolio.