DISCOVERING VALUE

SKBA brings the investor a strategic array of value-based investment solutions, backed by perspective, process and performance. Our objective is to outperform our benchmarks while maintaining appropriate risk exposure.

ValuePlus, a value-oriented investment philosophy, seeks to achieve long-term capital appreciation by investing in a diversified portfolio of undervalued equity securities. The strategy was originally designed for clients who desire high current income while still participating in long-term real economic returns of the stock market.  The Plus is the dividend yield in excess of the market, aimed at capturing excess returns and dampening volatility.

OUR APPROACH

We begin with a universe of securities with a minimum market capitalization generally greater than $1 billion. Our valuation filter evaluates the Relative Dividend Yield (RDY) of each company in relation to a universe consisting of the largest 500 dividend paying companies (by market capitalization) as well as to its own history. Companies passed through this RDY valuation filter provide a diverse group of investment names from which to begin our research process.

While we start with the implied earning power of a company reflected by its' dividend payout policies, we then forecast a companyʼs earnings power -- its long-term ability to generate profit for reinvestment or distribution to shareholders. Our research process determines if an investment will offer sufficient return potential. We focus on factors such as balance sheet & income statement strength, competitive position & overall industry prospects, as well as managementʼs alignment with shareholdersʼ interests, and dividend safety.

SELL DISCIPLINE

We will typically sell a security when:

Stock reaches valuation extreme
We expect or observe a long-term deterioration of fundamentals
We identify more compelling investment ideas
Company exhibits a lack of shareholder orientation
The stock weighting exceeds 5% of portfolio
 

PORTFOLIO CONSTRUCTION

Our objective is to construct a portfolio of 40-60 stocks diversified by sector to control risk. Our bottom up approach to stock selection highlights industries and sectors with the most attractive values. Sector weights are reviewed when they reach the greater of 15% of the portfolio or two times the benchmark weight, whichever is greater.

STRATEGY TEAM MEMBERS

Andrew W. Bischel, MBA, CFA
Kenneth J. Kaplan, MBA, CFA
Josh J. Rothé, MBA
Matthew D. Zuck, MBA, CFA