OUR INVESTMENT PHILOSOPHY
Our investment philosophy commences with a steadfast focus on securities from distinguished companies. We believe in the importance of companies demonstrating a consistent history of generating Free Cash Flow (FCF). FCF, in our perspective, is pivotal, granting a company the resilience to sustain dividends during economic uncertainties and empowering it to be self-sufficient and opportunistic in challenging interest rate environments.
We look for managers who are owners and who put the interests of their shareholders first and foremost. When we take a position in a company, we do so because we understand the potential economic benefits of owning an interest in that company. This approach is designed to accomplish the following goals:
Quality. Transparency. Accessibility.
Quality
Quality is our foundation. We exclusively invest in what we consider high-quality assets. Quality, to us, encompasses various factors, with a history of generating free cash flow being paramount. A quality firm exhibits economic resilience and financial robustness. By assessing a stock’s franchise and financial strength, we achieve a more comprehensive view of its quality. As Warren Buffett wisely noted, “it’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
Transparency
We advocate for owning individual securities over investment products like mutual funds, alternative investments, or structured notes. We believe owning individual securities fosters an intimate comprehension of portfolio dynamics, enabling investors to grasp both contributors and detractors of performance and better anticipate the possible impact of near-term events. The inherent transparency in individual securities helps to ensure a clearer understanding of portfolio composition and total investment expenses. With this transparency, investors are positioned to be fully cognizant of their portfolio holdings and the complete cost of the investment strategy.
Accessibility
Equally significant is our unwavering commitment to accessibility. We firmly believe that clients should have unrestricted access to their funds and direct communication with their financial advisor. Unlike investments akin to “Hotel California,” where clients check their money in but cannot leave, we advocate for financial freedom and timely access to your investments. In a landscape dominated by impersonal investment products, our approach seeks to stand apart. While many investment managers remain elusive, we are present and engaged as your financial advisors.
Choose LeBaron Wealth Advisory Group, where Quality, Transparency, and Accessibility are not just principles but the bedrock of your financial goals.
What Is Free Cash Flow (FCF)?
We define high-quality companies to be those with a history of generating free cash flow. Free cash flow is the cash remaining after a company has paid:
- Expenses
- Taxes
- Interest on Debt
- Long-Term Investments
Attributes of FCF-Producing Companies
Positive FCF indicates a company is generating more cash than it needs to operate the business and is in a position to consider the following, all of which are likely positive for investors:
Paying or increasing their dividend
Buying back stock
Paying down debt
Expanding the business or investing in growth opportunities through mergers and acquisitions
Being positioned to endure protracted periods of economic downturn
Free cash flow yield can determine an investor's payback period. The higher free cash flow yield, the lower the payback period.
Stifel does not provide legal or tax advice. You should consult with your legal and tax advisors regarding your particular situation. Changes in market conditions or a company’s financial condition may impact a company’s ability to continue to pay dividends, and companies may also choose to discontinue dividend payments.
Discretionary Portfolio Management
As a portfolio manager in Stifel’s Solutions Program, an advisory services program, James manages assets on a discretionary basis using a pre-screened investment approach focused on free cash flow for clients who choose this program. This allows the opportunity for portfolio customization to address client-specific issues, such as tax planning and investment income. The result is highly personalized investment management, with strategies tailored to the investor’s specific needs or objectives.
The Solutions program requires a minimum investment, which varies by strategy. Ask your Financial Advisor for a Disclosure Brochure, which further outlines the fees, services, exclusions, and disclosures associated with this program. Since all investment decisions in a Solutions account are made by the Financial Advisor without having to receive prior client approval, it is important that Solutions clients have detailed knowledge of the Financial Advisor’s individual investment philosophy and decision-making process before entrusting him or her with their portfolio. You should consider all terms and conditions before deciding whether the Solutions Program and any particular strategy are appropriate for your needs.