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Managing Risk
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Risk control is of utmost important to
our firm across all product categories.
The Profit Investment Management Style (PIMS) dictates that we build
portfolios one security at a time, based on fundamental valuation
criteria. The primary risk control measure is careful stock selection
through fundamental financial statement analyis and investment thesis
consideration. We monitor all our portfolios through our Advent Axys
and Moxy record keeping systems by establishing certain guidelines such
as
- no
security can represent more than 5 percent of a portfolio at cost
- no
sector can be 25 percent at cost.
Profit
Investment Management also implements an
internal early warning system to locate potential underperformance in
our
portfolios based upon the individual underperformance of the underlying
securities. Profit utilizes a fifteen
percent (15%) decline in a stock’s value as a trigger for the
investment team to
reevaluate the portfolio holding, formulate reasoning as to why the
underperformance is evolving and justify its presence within the
portfolio. With a thirty percent (30%)
decline in value, PIM exits the position on a security level and
reevaluates
the investment focus on the portfolio level.
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