Global Dividend Value equity.

The Global Dividend Value product seeks long-term capital appreciation and current dividend income by investing primarily in diversified portfolio of equity securities with capitalization of more than $200 million.

The firm operates an Investment Policy Group directed by our CIO and comprised of the portfolio managers, fundamental analysts, quantitative analyst, portfolio implementation manager and our CEO. The Investment Policy Group meets monthly to review macroeconomic trends and product portfolio structure. The voting members are our CIO, portfolio managers, fundamental analysts and our CEO.

Our quantitative analyst oversees our proprietary sector-specific valuation models.

Two-person analyst teams and a Portfolio Manager, including our CIO, take responsibility for specific sectors and perform the fundamental analysis of our process. Weekly sector meetings allow all Portfolio Managers and the fundamental analyst to review work and decide on individual security positions.

Ours is a bottom-up process. We screen a universe of about 3,500 companies (800 Large Cap, 2,400 Small Cap and 300 ADRs) with a capitalization over $200 million. Then we assign each to one of 20 industry sectors. Next, our Quantitative Analyst values each stock based on a sector specific valuation model focused on price/earnings, price/book and price/cash flow as well as factor weightings.

The initial sort identifies companies that appear to have the most attractive value. We then filter these companies for quality, looking for low outstanding debt to capitalization, positive free cash flow and stable earnings estimate revisions. As a last step, our portfolio managers and fundamental analysts screen for positive trends such as improved cash flow, margins and leverage to rule out companies that appear unhealthy.

Next we identify a current or imminent catalyst that is likely to improve shareholder value. Typical catalysts include corporate or industry restructuring or consolidation, new product introductions, changes in competition and selling or minimizing unprofitable divisions.

The in-depth portion of our process focuses on solid qualitative research to identify factors that will trigger significant improvement in a company's fundamentals. We analyze trends in earnings growth, margins, operating cash flow, free cash flow and overall corporate direction. We consider for purchase only those stocks we’re confident will prosper in the near future.

Managers look for companies that have some or all these attributes:

• Positive free cash flow.
• Corporate restructuring or management changes.
• Increasing market share or new product development.
• Inexpensive (i.e., low valuation) relative to their industry sector.
• Relatively flat or increasing earnings estimate revisions.
• Other evidence of positive catalysts for change.

Analysts complete a written report on each company, including a section outlining Key Risks and Opportunities and Reasons to Own. The portfolio management group reviews the analysts’ work, with group agreement on inclusion and exclusion for our next screen.

Finally, we screen for dividend yield greater than the S&P 500 Index and highest yields within sectors.

The team makes investment decisions and our Portfolio Implementation Manager puts them into effect. The CIO may veto decisions, but rarely, if ever, does because our process and discipline is well-defined and understood by the entire investment team.

The quantitative portion of our investment process uses sector-specific (20 sectors, firm defined) valuation models that are unique to our firm. Subtleties for each sector exist, but in general each stock is value based on metrics such as price/earnings, price/book and price/cash flow.

In addition to diversification across industry sectors and within sectors, we typically hold 50 to 55 securities to reduce company-specific risk. We seek to further limit risk through a careful assessment of the quality of accounting, management and balance sheet.

These diversifying strategies allow us to lower our spread exposure to company or industry surprises that are out of our control, while positioning for profitability.