Investment Capabilities
Equity Investing
Equities and real estate have historically provided the best long-term returns to investors, but are among the most volatile asset categories. Covington’s equity investment approach is to construct blended stock portfolios with a mix of geographies (both foreign and domestic stocks), styles (value and growth), and capitalizations (small cap, mid cap, and large cap). This style allows the client to participate in a number of equity sectors, which tends to smooth performance over time and exposes an account to a large range of opportunities. Within this blended framework, Covington’s investment professionals then seek to add value through effective style rotation, which involves the under- or overweighting of sectors and themes to capture industry or economic trends, while maintaining tax efficiency where appropriate.
The Covington equity selection process is centered on the fundamental research performed by our investment professionals. It begins with the idea discovery process which utilizes internal forward-looking research to produce a steady flow of original investment ideas that have attractive risk/reward characteristics.
The investment process involves the screening of companies for demonstrated ability to:
• Increase revenues and earnings on a consistent basis
• Maintain a strong balance sheet
• Maintain above average operating margins
• Operate in an attractive industry with a durable competitive advantage
Finally, valuation characteristics are assessed to determine an appropriate entry price for the security.
