Equity Management
Earnings Driven Strategies

Lowe, Brockenbrough believes that stocks of larger, well capitalized companies, producing sustainable, above average earnings growth when purchased at reasonable valuations should produce superior returns for our clients. In an effort to realize such returns, Lowe, Brockenbrough employs a process which combines an experienced team of investment professionals with proven quantitative research and fundamental disciplines.

Our Earnings Driven strategies incorporate a multi-factor screening process and the systematic implementation of buy and sell disciplines to construct diversified portfolios. These portfolios emphasize securities and industries with the most compelling earnings and valuation profiles.

The investment strategy is designed to deliver consistently strong risk-adjusted performance in a more efficient segment of the market. We strive to generate excess returns across market cycles without undue volatility of absolute or relative return. The systematic implementation of our investment process should reduce the judgmental biases and behavioral traits that can influence investment decisions and conveys greater confidence in repeatable results.

We apply a multi-factor screening process to a defined universe of stocks. Each stock in the universe is screened and assigned a ranking based upon earnings and valuation characteristics. Once rankings have been established, the portfolio is constructed by generally purchasing those securities with the highest rankings in the defined universe. Stocks are regularly reviewed and assigned updated rankings.

As the process seeks to gain incremental exposure to the stocks with the highest rankings in our screening metrics, the residual holdings characteristics generally reflect the dynamic aspect of this strategy. The consistent application of earnings and valuation screens is expected to result in portfolios demonstrating higher growth characteristics with lower valuation levels. The portfolio construction process is consistent across each strategy.

The Earnings Driven and Earnings Driven Select strategies apply the multi-factor screening model to a universe of 600 stocks consisting of the S&P 500 companies, the 50 largest Mid-Cap stocks and the 50 largest ADRs. The portfolios are diversified across 40-50 holdings, resulting in an average position size of approximately 2% to 3%.

Where possible, we attempt to reduce volatility through sector diversification of securities with the highest rankings. Each strategy is managed to emphasize securities with the most appealing earnings characteristics, however the Earnings Driven strategy incorporates a less active implementation process than the other strategies.