The fully-managed approach to developing our overall philosophy is reflected in the specifics of equity management. Fundamental decisions on equity policy are made after carefully considering the basic position of the economy, various industries, and individual companies. From this, we develop major projections and determine the desirable level of equity exposure. Equity goals are stated as a percentage range rather than a single figure to provide the flexibility to accomplish investment goals. As policy dictates, cash reserves will be used periodically as an alternative to equities. Such reserves are themselves actively managed to insure that the best short-term investments are being utilized.
Our universe of potential equity investment includes a broad range of industries and companies. Once selections are made based upon fundamental analysis, investments are made in the most attractive security representing equity participation. This would include not only common stocks, but also convertible debentures or convertible preferred stocks.
We attempt to avoid biases which lead to controversies such as the “growth stock-cyclical stock” debate. This acknowledges that over the longer term most stocks are fundamentally attractive at a given time and price.
Another key element of Robinson Investment Group’s equity policy is broad diversification. This is essential to provide balanced participation in stock market recoveries and to minimize exposure to unforeseen events. This type of diversification reduces the geographic, political, and economic risks.
RIG’s Value equity investment philosophy is to seek, in a quantitative manner, high quality companies which possess superior financial characteristics including lower relative price valuations, above average earnings per share growth, and dividend yield. RIG reviews approximately 2,000 companies in its universe. Model portfolios are developed using large capitalization, small capitalization and international stocks. RIG takes a longer term view of investing. With average business cycles lasting approximately three to five years, RIG believes in a buy and hold strategy versus momentum investing. As a result, portfolio turnover will average 40% annually. The average portfolio will usually consist of 40 to 50 names.