Strategic Equity

Philosophy

Through over 40 years of research and successful application, Contravisory Investment Management (CIM) has developed a disciplined, quantitative approach based on long-term relative price-trend analysis. This approach identifies stocks possessing good underlying fundamentals and investor psychology that are expected to be leading stocks and industry groups for a protracted period. CIM’s strategy is non-correlated to most other managers, making it attractive to those seeking style diversification. This style is opportunistic, not constrained by market capitalization (small vs. large) and/or style (growth vs. value). The CIM strategy has proven its worth over many market cycles, identifying changes in stock prices, one stock at a time.

Strategic Equity

All-Cap

Proprietary research provides the basis for this comprehensive and highly-disciplined approach to equity investing. Beginning with a universe consisting of the S&P 500 stocks and an additional 1500 issues, long-term relative price-trend analysis is performed in order to identify those stocks that are leading or lagging in absolute terms, as well as on a relative basis versus the S&P 500 Index. Particular emphasis is given to changes in trend direction, either positive or negative. All stocks, industry groups and economic sectors are then assigned a rating within the Contravisory Research relative price cycle.

Relative Price Cycle

Historically, stocks and industry groups have tended to move in 18–24 month relative price cycles. Therefore, when a trend is identified in a stock or industry group, the duration of that trend (either positive or negative) is expected to be 18–24 months.

Portfolios are carefully constructed and managed one-stock-at-a-time. Generally, portfolios will have an average of 40 positions. Changes to the portfolio will typically occur once per month, thus resulting in relatively low turnover and lower transaction costs. All positions are initiated at approximately 2.5% of the total market value of the portfolio. Positions which appreciate to over 6% of the portfolio are generally reduced by half.

The portfolio will concentrate positions (buy) in A, B and C rated stocks according to the CR Relative Price Cycle, and sell those that are downgraded to D. The portfolio invests in liquid domestic equities, is monitored daily and will typically be fully invested in the market.