A STUDY ON

“PORTFOLIO MANAGEMENT ON EQUITY FUND”

Report submitted in partial fulfillment of the requirement for the award of the degree of
MASTER OF BUSINESS ADMINISTRATION
OF
OSMANIA UNIVERSITY
Submitted by
K.SAIKIRAN
Roll. No. 2-262-09-672-003
Under the guidance of
Mr. Mohammed Babar Zamaan
ACADEMY OF MANAGEMENT STUDIES

(Approved by AICTE & Affiliated to Osmania University)

Yenkapalli, Moinabad Road, R.R. District.
2009-2011

DECLARATION BY STUDENT
I K. Sai kiran bearing the roll number 2-262-09-672-003 a student of Academy of
Management Studies, Hyderabad hereby declare that this project titled “a study on
Portfolio management on equity fund” is bonafied work done by me at Bharti Axa life
insurance, Hyderabad in partial fulfillment of the requirements for the award of Master
of Business Administration from Osmania University, Hyderabad. This report has not
been submitted to any other institution or university for award of any other degree or
diploma or associate or fellowship or similar other titles and that it is an original work
undertaken by me.

K.SAIKIRAN
Roll.No. 2-262-09-672-003

Place: Hyderabad
Date:

CERTIFICATE
I hereby certify that the project titled “A STUDY ON “PORTFOLIO MANAGEMENT
ON EQUITY FUND” work done by K.SAIKIRAN bearing the roll number 2-262-09-
672-003 at BHARTI AXA LIFE INSURANCE, Hyderabad. During the period of his
study under my guidance this report will be submitted to the Osmania University in
partial fulfillment of the requirement for the award of the degree of Master of Business
Administration. This report has not been submitted to any other institution or university
for award of any other degree or diploma or associate or fellowship or similar other titles
and that it is an original work done by him.

Name of the Guide

Mr. Mohammed Babar Zamaan
HEAD OF DEPARTMENT.
Academy of Management Studies
Hyderabad.

Place: Hyderabad
Date:

ACKNOWLEDGEMENT
Before I go on to elaborate and explain this exhaustive piece of work, I would like to
first and foremost express my heartfelt gratitude to the people who have contributed to
the successful completion of this project.

I would like to convey my gratitude to Mr. Abhinay, (AGENCY MANAGER) for his
valuable support given to me in the completion of the project, and without whose help
and guidance the completion of project would not have been possible.

I wish to express my sincere thanks to Mr. Murtuza who guides me also the Head of the
department Mr. Mohammed Babar Zamaan and faculty of my college for providing
guidance and support.

I owe special thanks to my principal Dr. Mohammed Haseebullah for his enthusiasm
and his encouragement for the completion of project work.

I am also thankful to my parents, faculty, friends, well wishers who encourage me to

complete this project successfully.

(K.SAIKIRAN)
Date:

CONTENTS PAGE NUMBERS

1. INTRODUCTION

2. THE COMPANY
3. REVIEW OF LITERATURE

4. DATA ANALYSIS & PRESENTATION

4.1 Performance Analysis
4.2 Interpretations

5. FINDINGS SUGGESTIONS &

CONCLUSIONS

6. BIBLIOGRAPHY
Chapter -1
Introduction
Equity portfolio management
The art and science of making decisions about investment mix and policy, matching
investments to objectives, asset allocation for individuals and institutions, and balancing
risk against performance.

Equity Portfolio management is all about strengths, weaknesses, opportunities and

threats in the choice of equity shares of different companies, domestic vs. international,
growth vs. safety, and many other tradeoffs encountered in the attempt to maximize
return at a given appetite for risk.

Equity Analysis

Professional investor will make more money & less loss than, who let their heart rule.
Their head eliminate all emotions for decision making. Be ruthless & calculating, you are
out to make money. Decision should be based on actual movement of share price
measured both in money & percentage term & nothing else. Greed must be avoided
patience may be a virtue, but impatience can frequently be profitable. In Equity Analysis
anticipated growth, calculations are based on considered FACTS & not on HOPE. Equity
analysis is basically a combination of two independent analyses, namely fundamental
analysis & Technical analysis. The subject of Equity analysis, i.e. the attempt to
determine future share price movement & its reliability by references to historical data is
a vast one, covering many aspect from the calculating various FINANCIAL RATIOS,
plotting of CHARTS to extremely sophisticated indicators.

A general investor can apply the principles by using the simplest of tools: pocket
calculator, pencil, ruler, chart paper & your cautious mind, watchful attention. It should
be pointed out that, this equity analysis does not discuss how to buy & sell shares, but
does discuss a method which enables the investor to arrive at buying & selling decision.
The financial analysts always need yardsticks to evaluate the efficiency & performances
of any business unit at the time of investment. Fundamental analysis is useful in long
term investment decision. In Fundamental analysis a company s goodwill, its
performances, liquidity, leverage, turnover, profitability & financial health was checked
& analysis with the help of ratio analysis for the purpose of long term successful
investment..

Technical analysis refers to the study of market generated data like prices & volume to
determine the future direction of prices movements.

Technical analysis mainly seeks to predict the short term price travels. The focus of
technical analysis is mainly on the internal market data, i.e. prices & volume data. It
appeals mainly to short term traders.

It is the oldest approach to equity investment dating back to the late 19th century.

Assumptions for the Equity Analysis.

1. Works only in normal share-market conditions with great reliability, it also works in
abnormal share-market conditions, but with low reliability.
2. Equity analysis is purely based on the INVESTMENT PHILOSOPHY , so the
investment object has vital importance associated to return along with risk.
3. Cash management gets the magnitude role, because the scenario of equity analysis is
revolving around the term money
4. Portfolio management, risk management was up to the investor s knowledge.
5. Capital market trend is always a friend, whether it is short run or long run.
6. You are buying stock & not companies, so don t be curious or panic to do postmortem
of companies performances.
7. History repeats: investors & speculators react the same way to the same types of events
homogeneously.
8. Capital market has a typical market psychology along with other issues like;
perceptions, the crowd Vc the individual, tradition s & trust.
9. An individual perceptions about the investment return & associated risk may differ
from individual to individual.
10. Although the equity analysis is art as well as sciences so, it also has some exceptions.

Need for the study:

•The purpose of the study is to know the fluctuations in the share price of sample
companies.
•The purpose of the study is to help the unknown investors for investing in securities.
•To update the portfolio reviewed and adjusted from time to time in tune with market
condition.
•To analyze the risk and return on securities.
•To test portfolio strategies before taking decisions.

Objectives of the study

The objectives of Equities and investment /portfolio management can be categorized as
follows:
• To observe the rate of fluctuations of selected companies.
• The amount of risk involved in the securities of the sample companies.
• To make comparative study of risk and return of the sample companies.
• To know on what basis Bharti Axa invest in companies.

Scope of the study

The study covers all the information related to the Equity fund and the Portfolio
management it also covers the investor risk in the investment in various securities.
•Identification of the investor’s objectives, constraints and preferences.
•Strategies are to be developed and implemented in tune with investment policy
formulated.
•To reduce the future risk in advance.
•To earn maximum profit in the securities.
•Review and monitoring of the performance of the portfolio.
•Finally the evaluation of the portfolio.
Methodology of the study
Primary sources
• Detailed discussions with Mr. Abhinay(Agency manager) and other members
of the finance department

Secondary Sources:
• The data is to collected from Published annual reports of the Bharti Axa life
insurance, websites, newspapers, etc for the year 2010.

Period of the study:

The study of Equity value and portfolio management for a period of four months
(sep2010-dec2010) in Bharti Axa life insurance.

Limitations:
•The companies are selected on the basis of the performance
•Expand or contract the size of the portfolio reflect the changes in investor risk
disposition.

Source :
BSE, The standards set by BSE in terms of market practices and technologies have
become industry benchmarks and are being emulated by other market participants. BSE
is more than a mere market facilitator. It's that force which is guiding the industry
towards new horizons and greater opportunities.
CHAPTER III

COMPANY PROFILE
LIFE INSURANCE
India is the fifth largest life insurance market in the emerging insurance economies
globally and is growing at 32-34% annually according to the Life Insurance Council.

This impressive growth in the market has been driven by liberalization, with new player’s
significantly enhancing product awareness and promoting consumer education and
information.

Bharti AXA Life Insurance Company

• Bharti AXA Life Insurance is a joint venture between Bharti, one of India’s
leading business groups with interests in telecom, agriculture business & retail,
and AXA, world leader in financial protection and wealth management.
• Bharti AXA Life Insurance Company Limited started operations in Aug. 2006
• Bharti AXA Life is one of the newest and fastest growing life insurance
companies in the country.
INSIDE BHARTI
Awards

• Airtel wins the “World Communications Best Brand Award”

• Bharti Tele-Ventures is the “Asian Mobile news Mobile Operator Of The Year”
• Airtel chosen as 'Most Preferred Mobile Service' by CNBC Awaaz Consumer
Awards
• Bharti Tele-Ventures is the Indian Mobile Operator of the Year 2005
• Bharti wins Silver Trophy at the CII National Six Sigma Awards
• Bharti Tele-Ventures amongst the top technology companies in the world -
Business Week

The First

• To launches India's first private sector National Long Distance service

• Mobile service to cross the three million customer mark & to cross 1,00,000 in
Himachal
• To launch world's first Flexi - Recharge pre-paid Coupon for its customer
• To announce innovative outsourcing to enhance Quality of Customer Services
• To launch talk-time transfer service for its pre-paid customers in Delhi
• To win the prestigious ‘MIS Asia IT Excellence Award 2005’

Achievement

2001
Bharti crosses 1 Million customer mark in mobile services & records top-line growth of
67%

2002
Bharti gets international long distance service licence & listed on BSE, NSE & DSE
2003
Bharti Tele-Ventures near break-even
Maintains market leadership with a market share of 26.5% of all India mobile customer
base

2004
AirTel crosses the 6 million customer mark nationally
Bharti Tele-Ventures crosses Rs 5,000 crores revenues & earns net profit of over Rs 600
crores for the year

2005
Bharti Enterprises and AXA Asia Pacific Holdings Limited announce partnership for a
life insurance joint venture in India

Inside AXA

• Over 130 years of local experience

• A$45.6bn funds under management (FUM)
• Gross inflows over A$10.8bn
• Over 1,050 advisers and 2,000 employees
• Over 120 years of local experience
• Top 3 in both wealth management and financial protection markets
• A$6.9bn FUM
• Gross inflows of over A$2.1bn
• Over 470 advisers and 270 employees
• Acquired in 1986; over 18 years of local experience
• Top 6 for new business
• A$7.3bn FUM
 • A$1.5 bn total premium
• Over 2,100 agents, 280 advisers and 530 employees
• Joint venture established in 1999 with China Minmetals Group
• Headquarters in Shanghai and branches in GZ & BJ
• Top 4 foreign insurer in shanghai in premium income
• A$75m FUM
• A$29m total premium
• 1,700 agents and 230 employees
• Acquired in 1995
• Wholly-owned subsidiary
• Top 10 in regular premium
• A$871m FUM
• A$174m total premium
• 230 agents and advisers and 100 employees
• Established ipac in 2003

Being Bharti AXA

• To achieve a top 5 market position in India through a multi-distribution, multi-

product platform.
• To adapt AXA’s best practice blueprints as a sound platform for profitable
growth.
• To leverage Bharti’s local knowledge, infrastructure and customer base.
• To deliver high levels of shareholder return.
• To build long term value with our business partners by enhancing the proposition
for their customers.
• To be the employer of choice to attract and retain the best talent in India.
• To be recognized as being close and qualified by our customers.
Strategies
• To achieve a top 5 market position in India through a multi-distribution, multi-
product platform.
• To adapt AXA’s best practice blueprints as a sound platform for profitable
growth.
• To leverage Bharti’s local knowledge, infrastructure and customer base.
• To deliver high levels of shareholder return.
• To build long term value with our business partners by enhancing the proposition
for their customers.
• To be the employer of choice to attract and retain the best talent in India.
• To be recognized as being close and qualified by our customers.
Strategic differences
• Strong partner Bharti - provides access to customer base of more than 130 million
• Multi channel execution capability
• Current Asia product range which is a strong match to products sold to the mass
and mass affluent
• Global scale providing cost effective and speedy re-use of systems, products and
business capability
• Strong AXA and Bharti brands which can be leveraged to attract and retain a high
quality management team

Bharti AXA Life offers a range of innovative products and services that cater to specific
insurance and wealth management needs of customers.

Bharti AXA Life Insurance undertook an in-depth analysis wherein Bharti AXA
identified the notion of preference was totally related to the trust granted to various
names in insurance and financial services. The level of trust is very inadequate today,
regardless of the brand considered. This is because the perception of consumers is that
Insurance companies are all evolving only in "a world of promises." And this is what
Bharti AXA have to redefine.

Beyond promises... proof

Bharti AXA don't want to make promises any more. Instead, we want to demonstrate
their ability to respond to client needs with real and tangible proof and, in so doing, to
establish an authentic relationship of trust with our clients.

These are the three attitudes that clients most expect from an insurance and financial
services company in exchange for their vote of confidence. These three attitudes stood
out from the others in the consumer research we conducted across markets, regardless of
their level of maturity.

They are at the heart of Bharti AXA actions and commitments to clients.

• Attentive

• Reliable

• Available
 CHAPTER III

REVIEW
OF
LITERATURE
A Share market/stock markets is an open market for fiscal operations such as trading of
a firm's share and derivatives at a fixed cost. These securities are further listed on a stock
exchange. A Share market does not offer any corporeal service and is not a separately
owned business entity.

Main components of Indian Share Market

Bombay Stock Exchange (BSE)

Bombay Stock Exchange is known to be the oldest stock exchange in the entire Asian
region. If someone wants to know about the history of the India share market, it becomes
synonymous with the history of the Bombay Stock Exchange. It started functioning in
1875 with the name 'The Native Share and Stock Broker's Association'. Under the
Securities Contracts (Regulation) Act, 1956, the association got its recognition as a stock
exchange in 1956. When it started, it was just an association of persons but with the
recognition it got transferred to a corporate and demutualised entity.

Trading items in Bombay Stock Exchange -

Equity or Shares
Derivatives (Futures and Options)
Debt Instruments

The main index of BSE is known as the BSE SENSEX or simply SENSEX (Sensitivity
Index). It is an index which comprises of 30 financially sound company scrips, with an
option to be reviewed and modified from time-to-time. The index calculation is based on
the 'Free-float Market Capitalization' methodology. Leading bourses like the Dow-Jones
also follow this methodology. Currently the Sensex is hovering around the 17,000 mark,
all expected to touch 20K by 2010. But then volatility has its important role to spoil the
entire game.
National Stock Exchange (NSE)
National Stock Exchange (NSE) is considered to be the leader in the stock exchange
scenario in terms of the total volume traded. The market capitalisation the National Stock
Exchange touched about $921.31 billion at the end of May 2009. The National Stock
Exchange received the recognition of a stock exchange in July 1993 under Securities
Contracts (Regulation) Act, 1956. The products that are traded in the National Stock
Exchange are:-
Equity or Share
Futures (both index and stock)
Options (Call and Put)
Wholesale Debt Market
Retail Debt Market

NSE has a fully automated screen based trading system which is known as the NEAT
system. The transactions are carried on with speed, efficiency, and are all transparent.
The risk management system of the National Stock Exchange is world class and can be
considered as the benchmark for other bourses.

The leading index of NSE is known as Nifty 50 or just Nifty. It comprises of 50

diversified benchmark Indian company scrips and is constructed on the basis of weighted
average market capitalization method.

Regulatory Authority of Indian Share Market

SEBI or Securities and Exchange Board of India is the market watchdog and has the
responsibility of protecting the investors' interests, develops regulatory norms and helps
in the development of the securities market in India.

Why to invest in Indian share market ?

• An investor does not require a lot of money to start investing in India share
market unlike buying property and paying off a monthly mortgage.
 • Time of trading involved spans from small to big. One can trade for a short period
of time or even a lengthy span.
• It helps you to see 'fast' cash if the market is in robust mood and helps in fast
liquidation.

Essential rules of Indian Share Market

• Whenever share market is at its crest it is bound to dip at some point of time.
• If the share market is down, it will only increase if there are no external aspects
influencing it.
• Unlike the common belief of investing in booming share market, it is advisable
not to block your hard earned money in already flourishing Sensex and NIFTY. It
is better to wait for market bottom trend and then purchase shares at lower cost in
order to trade it later.
• The excellent time for investment is when the market is low keeping the basics in
consideration.
• Seek the advice of professionals who will not only provide you tips on best
investment options but also on favorable market conditions.
• Update yourself on the prevailing market conditions
• Whenever market witness an upward trend always purchase first and then sell the
securities, and when the market dips always buy later and sell first.

Tips on investing intelligently in Indian Share Market

• Consider selling the shares which you have bought long time back and are
indicating gains. Even if they are not willing to offer you considerable gains then
its time to get rid of them are invest your money in productive schemes.
• Diversify your shares buy investing in different sectors. Also consider investing in
equity funds and to stabilize your equity investments invest a part in fixed income
options like the bonds, Public Provident Fund, National Savings Certificates and
post office deposits. You can also consider a balanced or debt fund if you have
restrained budget.
 • Do not consider the shares based on layman's advice. Stride carefully and invest
in shares that you are comfortable investing in. Judge the firm by its past records
and assess it personally. Take the advice of the fund manager who manages that
specific fund.
• If you have allocated more than half of your investments in equity, then stick to
your plan. Do not surpass that pre-decided perimeter and believe in the
performance of the market.

INTRODUCTION TO INVESTMENT

Investment may be defined as an activity that commits funds in any financial form in the
present with an expectation of receiving additional return in the future. The expectations
bring with it a probability that the quantum of return may vary from a minimum to a
maximum. This possibility of variation in the actual return is known as investment risk.
Thus every investment involves a return and risk.

Investment is an activity that is undertaken by those who have savings. Savings can be
defined as the excess of income over expenditure. An investor earns/expects to earn
additional monetary value from the mode of investment that could be in the form of
financial assets.

The three important characteristics of any financial asset are:

•Return-the potential return possible from an asset.
•Risk-the variability in returns of the asset form the chances of its value going down/up.
•Liquidity-the ease with which an asset can be converted into cash
.
There are a large number of investment avenues for savers in India. Some of them are
marketable and liquid, while others are non-marketable. Some of them are highly risky
while some others are almost risk less.
Investment avenues can be broadly categorized under the following heads:
Corporate securities
•Equity shares.
•Preference shares.
•Debentures/Bonds.
•Derivatives.
•Others.
Corporate Securities

Joint stock companies in the private sector issue corporate securities. These include
equity shares, preference shares, and debentures. Equity shares have variable dividend
and hence belong to the high risk-high return category; preference shares and debentures
have fixed returns with lower risk.

The classification of corporate securities that can be chosen as investment

avenues can be depicted as shown below:
Equity
Shares
Preference
shares
Bonds
Warrants
Derivatives

Equity shares
By investing in shares, investors basically buy the ownership right to the company. When
the company makes profits, shareholders receive their share of the profits in the form of
dividends. In addition, when company performs well and the future expectation from the
company is very high, the price of the company’s shares goes up in the market. This
allows shareholders to sell shares at a profit, leading to capital gains.
Investors can invest in shares either through primary market offerings or in the secondary
market.
The primary market has shown abnormal returns to investors who subscribed for the
public issue and were allotted shares.

Stock Exchange:
In a stock exchange a person who wishes to sell his security is called a seller, and a
person who is willing to buy the particular stock is called as the buyer. The rate of stock
depends on the simple law of demand and supply. If the demand of shares of company x
is greater than its supply then its price of its security increases.
In Online Exchange the trading is done on a computer network. The sellers and buyers
log on to the network and propose their bids. The system is designed in such ways that at
any given instance, the buyers/sellers are bidding at the best prices.

PORTFOLIO
A portfolio is an appropriate mix of or collection of investments held by an institution or
a private individual. It is a collection of securities, since it is rarely desirable to invest the
entire funds of an individual or an institution in a single security.

• Portfolio analysis considers the determination of future risk and return in holding
various blends of individual securities.
• Portfolio expected return is a weighted average of the expected return of
individual securities but portfolio variance, in short contrast, can be something
less than a weighted average of security variances.
• As a result an investor can sometimes reduce portfolio risk by adding security
with greater individual risk than any other security in the portfolio. This is
because risk depends greatly on the co-variance among return of individual
securities.
• Since portfolios expected return is a weighted average of the expected return of its
securities, the contribution of each security to the portfolio’s expected returns
depends on its expected returns and its proportionate share of the initial
portfolio’s market value.
RISK
Risk is a concept that denotes a potential negative impact to an asset or some
characteristic of value that may arise from some present process or future event. In
everyday usage risk is often used synonymously with the probability of a known loss.
Risk is uncertainty of the income / capital appreciation or loss of the both.
The total risk of an individual security comprises two components, the market related risk
called systematic risk also known as undiversifiable risk and the unique risk of that
particular security called unsystematic risk or diversifiable risk.

Types of risk
Systematic risk (market)
Unsystematic risk (company risk)

Examples:
•Interest rate risk
•Market risk
•Inflation risk
•Demand
•Government policy
•International factors

Examples:
•Labor troubles
•Liquidity problems
•Raw materials risks
•Financial risks
•Management problems

PHASES OF PORTFOLIO MANAGEMENT

Five phases can be identified in this process:
Security analysis
Portfolio analysis
Portfolio selection
Portfolio revision
Portfolio evaluation

SECURITY ANALYSIS
An examination and evaluation of the various factors affecting the value of a security.
Security Analaysis stands for the proposition that a well-disciplined investor can
determine a rough value for a company from all of its financial statements, make
purchases when the market inevitably under-prices some of them, earn a satisfactory
return, and never be in real danger of permanent loss.

PORTFOLIO ANALYSIS
Analysis phase of portfolio management consists of identifying the range of possible
portfolios that can be constituted from a given set of securities and calculating their return
and risk for further analysis.

PORTFOLIO SELECTION
The proper goal of portfolio construction is to generate a portfolio that provides the
highest returns at a given level of risk. A portfolio having this characteristic is known as
an efficient portfolio. The inputs from portfolio
analysis can be used to identify the set of efficient portfolios. From this set of efficient
portfolios, the optimal portfolio has to be selected for investment. Harry Markowitz
portfolio theory provides both the conceptual framework and analytical tools for
determining the optimal portfolio in a disciplined and objective way.

PORTFOLIO REVISION
Having constructed the optimal portfolio, the investor has to constantly monitor the
portfolio to ensure that it continues to be optimal. Portfolio revision is as important as
portfolio analysis and selection.
PORTFOLIO EVALUATION
It is the process, which is concerned with assessing the performance of the portfolio over
a selected period of time in terms of returns and risk. This involves quantitative
measurement of actual return realized and the risk born by the portfolio over the period of
investment. It provides a feed back mechanism for improving the entire portfolio
management process.

The objective of the equity selection process is to create a portfolio of individual equity
issues having the common theme among them of Growth at a Reasonable Price, with
the focus on the long term.

Growth is measured as superior, sustainable growth in future earnings, cash flow and
dividends in relation to the stock market, in general, as well as the sector within which
the company competes.

A Reasonable Price is one that provides the investor with a reasonable basis for
expecting the elements of growth to flow through to an effective future total return on
investment. Traditional valuation tools including absolute and relative price earnings and
cash flow ratios, dividend yields and dividend growth, are first measured for each stock
relative to their respective historic ranges. These valuation levels are then also analyzed
in terms of prospective changes in the rates of growth and profitability relative to the
industry peer group and the market in general.

Process
While “Top-Down” policy and strategy remain the principal considerations in deciding
asset mix and sector emphasis, those portfolio policies are, in turn, influenced by
feedback from individual company work (the “Bottom-Up” approach). This is made
possible by the integration of research and portfolio management. Each investment
professional has policy and individual security research accountability along with his or
her portfolio management responsibilities.

Information and action meetings are held regularly in which all of the firm’s professional
staff participate. These working sessions range from daily information exchange and
problem solving to weekly research and policy coverage. The process helps organize and
focus team resources effectively while, at the same time, promoting creativity.

By integrating research and equity portfolio management, the firm:

Shortens the response time for implementing decision in portfolios

Improves the degree of understanding at the individual portfolio level so that firm policy
and security selection can be tailored specifically to client requirements

This approach tends to produce well-diversified portfolios that are neither highly
concentrated nor market indexed. The market’s normal rotation among types of
securities and industry sectors makes the diversified approach, with continuous emphasis
on growth, an effective way to meet our clients’ objectives and to control risk. At any
given point in time, portfolio holdings by type and sector reflect a combination of client
guidelines, attractive fundamental outlook and favorable price/value relationships.

Invest in High Quality Companies

Since stocks represent ownership of individual businesses that vary dramatically in
quality, a significant amount of emphasis is placed on identifying the best businesses to
own. Fundamentally strong, shareholder-oriented companies with superior, sustainable
sales and earnings growth are sought. Additionally, companies are preferred that control
their destinies through excellent management and have solid margins and excess cash
generation.
Valuation Disciplines
Historic relative multiple analysis, discounted present value techniques, and sound
judgment are utilized in reaching decisions on the appropriateness of an individual stock
price once the investment team is satisfied that fundamental characteristics are in place.

Issue Size
The universe within which issues are selected covers a wide range of market
capitalization. Given the objective of identifying issues providing growth at a reasonable
price, it is important to survey this full range of opportunities in selecting stocks.
Nevertheless, minimum liquidity requirements are also overlaid on the decision to ensure
that buying and selling can be conducted effectively. Accordingly, marketable securities
of large and mid-capitalization companies, i.e., generally above $1 billion, are utilized.