K&M

EQUITY INVESTMENT PHILOSOPHY 

• A company’s value grows as earnings and revenues grow.
• Grow capital by consistently owning and managing a portfolio of high quality companies with earnings and revenue growth averaging annualized rates in the mid to high teens.
• Select large capitalization growth companies with market capitalizations of $5billion or more.  Invest in companies with slightly lower capitalization when the opportunity for above average price appreciation is apparent.
• Benefit from the fact that the market values of a well managed growth portfolio will mirror the underlying growth rates in earnings and revenues over time.
• Invest only in proven, consistently well managed companies showing consistently superior financial results.
• Remain fully invested at all times as no one can time the market.
• Achieve total return through price appreciation and dividend paying companies. 

K&M EQUITY PORTFOLIO

BOTTOM UP STOCK SELECTION

·   Identify companies which exhibit consistent earnings and revenue growth rates in excess of the average company in the S&P 500 index. 
·   Select companies of top quality with superior historical and projected financial performance.
·   Diversify more through individual company selection and less by industry group selection.

  K&M INVESTMENT FUNDAMENTALS

·               Earnings Growth – 13% or More 
·               Revenue Growth – 13% or More 
·               Return on Equity – 20% or More 
·               Excess Cash Flow 
·               Beta – Close to S&P 500 
·               Dividend Growth Rate – 10% or More 
·               Favorable Debt Structure 
·               Market Capitalization - $5 Billion or More  

K&M ELIMINATES COMPANIES

WITH THE FOLLOWING CHARACTERISTICS:

·               Cyclical Earnings 
·               Large Exposure to Commodity Prices 
·               Major Lawsuits 
·               Significant Environmental Liabilities 
·               Limited Public Trading History 
·               Managements Not Acting In The Best Interest Of Their Shareholders 
·               Losing Favor With Large Institutional Shareholders  

K&M INVESTS IN COMPANIES

WITH THE FOLLOWING CHARACTERISTICS: 

• Superior, Proven Management Teams

• Diversification

• Substantial Global Revenues

• Leadership Positions In Their Industries

• Sound Financial Structures

• Robust Earnings Forecasts

• Technical Strength

• Reasonable P/E Ratios

• Solid Franchises in Growing Markets

• Favorable Insider Buying Activity

• Open And Detailed Communication With Shareholders

THE K&M EQUITY INVESTMENT

SELL DISCIPLINE

IN BULL MARKETS 

Compare Each Stock on K&M Buy List to Cost & Beginning Year Value  

If Stock is Down 10% - Put On Watch List 

If Stock is Down 15% - Sell 

IN BEAR MARKETS

EXCEPTION TO SELL DISCIPLINE

 The above limits are not used for very large corrections

when all stock prices decline. 

Stocks with favorable fundamental growth overview prevail.
 

FIXED INCOME PORTFOLIO OBJECTIVES 

K&M’s Fixed Income strategy is to add value to client accounts through intensive research on individual issue selection and proper sector judgment, resulting in a quality fixed income component of a balanced investment portfolio. 

• Individual fixed income securities are based on the income needs and risk tolerance of the client.
• Purchases may be limited to U.S. Government, Government Agency, and High Grade (“A” or better) corporate securities.
• Occasionally, higher yielding convertible or equity securities may be purchased.
• For liquidity purposes, portfolios hold an acceptable percentage of fixed income securities rated AAA, AA of U.S. Government or Government Agency issues.
• Purchase High Grade Municipal Securities (“A” or better) for taxable accounts when appropriate.