ACF Investment Advisors
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Philosophy & Strategies

 

Independent Research

 

Philosophy & Strategies

Mastrapasqua Asset Management advises an array of clients having investment objectives ranging from a growth objective, employing an all equity strategy, to an income objective, which may invest largely in fixed income.

The majority of our clients require a balanced allocation, using both equity and fixed income, as well as cash equivalents. In addition to producing income, a fixed income allocation can reduce volatility of balanced portfolios. Prior to investing, we work to fully understand each client’s unique investment parameters before developing an initial asset allocation.


Equity

Building the wealth of our clients through disciplined portfolio management is our primary goal. When it comes to our equity portfolios, our investment style is defined as a sector-focused. We analyze investments using our proprietary screens, in-house research, and direct contact with companies. We strive to grow investment principal without excess exposure to risk.

Independent research sets us apart from our peers. We rely on an experienced team of portfolio managers and in-house research analysts to build solid investment portfolios and to identify investment opportunities. Analysts evaluate company growth potential, which includes: market share prospects, financial condition, key components of earning and cash flow growth, execution of management’s vision, and competitive advantage.  Buy and sell decisions are based on our proprietary GRAD Point™ valuation methodology that combines the fundamentals of research with macroeconomic influences.  Please find our Equity Strategies below:

Large-Cap Growth Equity: Designed for the long-term investor seeking opportunities within large to mid capitalization companies. Typical portfolios consist of 35-45 stocks with a distinct sector focus.

Core Plus: The Core Plus strategy provides growing income through a dynamic blend of dividend-paying common stocks and investment-grade fixed income obligations with a goal of preserving capital and producing competitive returns.

Large-Cap Core Equity: This strategy's goal is to grow income, preserve capital and produce competitive returns. This strategy is derived from the equity allocation of the Core Plus portfolio.

Small/Mid-Cap Core Equity: The Small/Mid Cap Core Equity strategy's goal is to grow income, preserve capital and produce competitive returns. This strategy is the small to mid capitalization counterpart of the Large-Cap Core Equity portfolio.

Equity Income Strategy:  The Equity Income Strategy’s goal is to grow income and preserve capital with low volatility investments.  The strategy focuses upon high dividend paying stocks having a strong prospect of consistent dividend growth and a rising income stream.  The holdings may also include REIT’s, MLP’s and fixed income securities.

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Balanced

In balanced accounts, the first decision is to determine asset allocation. Mastrapasqua Asset Management will work with the clients to establish long-term asset allocation ranges and target guidelines for equity securities, fixed income securities, and cash equivalents. Alternatively we can work with a client’s established guidelines. The firm utilizes high quality fixed income securities in an effort to reduce overall portfolio volatility and to provide for current income requirements. Stocks are used to seek capital appreciation (i.e.: 60% equity/40% fixed, etc.).

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Fixed Income

We are a core fixed income manager whose style is characterized as having a top-down and value-oriented bias toward high credit quality portfolios for both our taxable and tax-exempt clients. We first focus on the current economic environment and strategically allocate fixed assets based on anticipated changes in the environment. We use asset allocation, yield curve positioning, duration management, and credit quality as our major portfolio factors. We consider various forms of economic data such as monetary policy, interest rate environment and investor sentiment to gain perspective on the bond market.

We then tailor the portfolio to own the securities that reflect the investor’s specific needs. These targets include: portfolio maturity, effective duration, overall portfolio quality rating, and sector weightings. Finally, we use relative valuation to determine the attractiveness of individual securities. This process results in a strategically structured portfolio that best fits the risk and return objectives of the client.

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Independent Research

Independent research gives Mastrapasqua Asset Management a competitive advantage. Mastrapasqua relies on an experienced team of portfolio managers and in-house research analysts to build solid investment portfolios and to identify investment opportunities. Analysts evaluate company growth potential, which includes: market share prospects, financial condition, key components of earning and cash flow growth, execution of management’s vision, and competitive advantage. Buy and sell decisions are based on a proprietary process that combines the fundamentals of research with macroeconomic influences.

 

Our Morning Meetings…

…begin with coffee and multiple copies of The Wall Street Journal and Investor's Business Daily.  The portfolio managers and analysts have arrived one by one, settling in at the large conference table surrounded by glass walls and windows with a view of the morning traffic as downtown Nashville wakes up. Following a greeting to the traders the conversation starts slowly as calls with news from "the street" are received. By all accounts, a typical morning research meeting, right? Wrong.

It is Frank Mastrapasqua's experience and love for teaching that creates a morning research meeting like none other. The themes of economics and business fundamentals are interwoven with the incoming information in a unique way that challenges Mastrapasqua's analysts to think beyond the sound bites. Knowledge is shared, and learning is a priority. Questioning is encouraged, and the mood of the meeting often takes on that of a classroom in an institution of higher learning. It is an atmosphere of openness and respect.

What makes our company unique is the fact that our investment team meets daily compared to most money managers who meet weekly.  Thus, the flow of information regarding names in the portfolio is continuously scrutinized.

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Proprietary Valuation Model: GRAD Point™ Methodology

Mastrapasqua's independent research team utilizes a proprietary valuation methodology, Growth to Risk-Adjusted Differential (GRAD Point™), for stock selection. The GRAD Point™ model evaluates absolute and relative company market valuations by determining those factors that contribute positively or negatively to valuation. The GRAD Point model is an enhancement over customary valuation measures.

Risk-Adjusted P/E:  Mastrapasqua Asset Management builds on the traditional price/earnings ratio (P/E) to growth rate benchmark to create a quantitative model, which incorporates a multitude of company, financial, and industry variables to either raise or lower the P/E, hence calculating a risk-adjusted P/E.

Macro Risk-Adjusted P/E:  The risk-adjusted P/E multiple is further adjusted based upon macroeconomic variables and trends, intending to capture the impact of the economic environment on corporate valuations. The macroeconomic adjustment evaluates the interest rate environment relative to a stock’s volatility (beta). A more volatile stock’s risk-adjusted P/E will be decreased more when interest rates are falling, and conversely, increased more when interest rates are rising relative to a less volatile stock.

GRAD Points™:  The macro risk-adjusted P/E is then compared to the projected 5-year earnings growth rate for the company. Stocks with growth rates higher than the macro risk-adjusted P/E are rewarded with positive GRAD Points. The outcome is a ranking system that delineates valuation reasonableness across industry and sector groups.

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August 19, 2017
104 Woodmont Blvd.,  Ste 320 • Nashville, TN  37205
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