KKRA has managed a CORE Equity Strategy since the firm's inception in 1983. In 1992, the managers elected to make substantive changes in the strategy's design characteristics. As such, we felt it prudent to begin our explanation and performance charts at this time. Since this time we have made periodic adjustments in the design criteria, but none that, we believe, would interrupt the integrity of the strategy.

By basing our investment philosophy on four "value" and "growth" criteria, we seek to manage our CORE Equity Strategy in a tax-efficient manner. Turnover tends to be low with the goal of minimizing realized short-term capital gains. In this manner, the CORE Strategy attempts to be tax sensitive to those investors in the higher tax brackets, and as a result, provide a higher after-tax return.


PORTFOLIO DESIGN PROCESS 

  • Identify the price appreciation potential of stocks through our CORE equity criteria valuation process. Stocks whose prices are targeted to appreciate at least 20% over the next 12-18 months are considered for purchase.
  • Analyze technical information to fine-tune the ideal entry points for purchasing attractive issues
  • Build a diversified portfolio of quality stocks with above average expected appreciation
  • Ensure all portfolio issues meet the strategy criteria and capitalization requirements
  • Set price targets and stop/loss benchmarks for each issue
  • Equally weight all positions at the time of purchase in equal dollar values
  • Attempt to minimize turnover ratio
  • Attempt to take long rather than short-term gains 

Experience has taught us that the use of several quantitative and qualitative criteria is particularly important in issue selection. Stocks that are well-positioned, have strong financial characteristics, are reasonably valued, and led by a strong management team have a high probability of performing better than the norm. These criteria include both "value" and "growth" characteristics.

KKRA continuously screens its stock universe for issues that meet these four criteria.

 

CORE EQUITY STRATEGY CRITERIA 

CRITERIA   OBJECTIVE         MEASUREMENT
Well-Positioned Consistent Earnings Growth         Strong Industry Niche
High Return on Equity
Low Debt to Equity Level
Above Average Short-Term Projected
Earnings Growth
           
Financial Characteristics Superior Stock Returns         Above Average Long-Term Projected
Earnings Growth
Moderate Beta
             
Reasonable Valuation Minimize Investment Risk         Below Market P/E
Price Earnings Ratio Below Projected
Growth Rate
             
Corporate Leadership Successful Execution         Prior Experience
Strong Organizational Skills
Corporate Vision
Insider Ownership