Investment Adviser Fundamental Research
Portfolio Construction
Once investments are identified, the portfolio is constructed under general weighting guidelines:
Sell Discipline
Leeb Capital Management Investment Adviser employs strict sell disciplines to protect clients’ portfolios. Positions will be sold if a stock:
Becomes Overpriced
Leeb Capital Management Investment Adviser does not use explicit price targets in the valuation of companies but instead relies upon relative valuation metrics, such as PEG. LCM views a sector and company’s value on a comparable basis per macroeconomic assumptions and will sell a position if the company’s PEG ratio is no longer less than the broad market.
Can Be Replaced With Better Risk / Reward Opportunity
Suppose an Investment Committee member believes another security can replace a current holding with better upside potential, a more favorable PEG, or a less risky profile. In that case, the company will be brought to the attention of the Investment Committee. We will talk about which position is better suited to the current strategy the firm is pursuing.
Changes Occur That Affect A Stock’s Fundamentals
The firm’s fundamental research does not stop once an equity security is included in the portfolio. This process also ensures that no adverse factors change the original fundamental case made for the stock’s inclusion in the portfolio. The position will be sold if one or more factors change and the stock is no longer fundamentally sound or likely to meet our expectations.
Position Weight Hits 8%
Under normal circumstances, Leeb Capital Management's investment process will only permit a position in a single security to be at most 8% of the portfolio. Once a position approaches this level, it will be scaled back. In the past, exceptions have been made for certain investments.
Price Depreciation
Portfolio managers regularly review stocks whose performance lags on both an absolute and relative basis. Any discrepancies in performance relative to a company’s sector and market- i.e., 20% underperformance on a 6-month trailing basis are immediately reviewed by our Investment Committee. The company’s PEG ratio will be adjusted accordingly if this depreciation is fundamental. If the resulting PEG is no longer attractive relative to the sector, then such circumstances warrant selling this position. The investment committee may decide to retain the position if the company’s fundamentals remain sound and its earnings and growth prospects remain intact.
Investment Strategy Communicated With Transparency
Dr. Stephen Leeb serves as the President, Research Chairman, and Chief Compliance Officer of Leeb Capital Management, an SEC-registered investment advisory firm. He has authored nine books on various economic and investment topics. In addition, he serves as the Editor of Turbulent Time Investor (“TTI”), an online newsletter focused on investing. TTI is published by TCI Enterprises, LLC, a separate company also owned by Dr. Leeb. The recommendations in the newsletter are general investment opinions and recommendations, not individual investment advice and should not be construed as personalized investment advice.
This activity is separate and distinct from the investment advisory services of LCM. LCM does not manage client portfolios based on the strategies or recommendations included in the newsletters. LCM’s clients can, however, acquire securities that are recommended in a publication. LCM, at all times, strives to act in the best interest of clients and to treat all clients in a fair and equitable manner. When trading securities of companies that are discussed/recommended in the newsletters to which LCM employees contribute content, in keeping with its fiduciary duty owed to advisory clients, LCM will transact in the securities prior to the release of the newsletters. Noting that the investment parameters of newsletter subscribers may differ from those of LCM’s clients, it is possible that LCM may act on behalf of LCM’s clients in a manner contrary to the recommendations provided in the newsletter subscribers.
Nothing on this website should be constructed as a solicitation or offer, or recommendation to acquire or dispose of any investment or to engage in any other transaction. LCM does not render or offer to render personal investment advice or financial planning advice through our website.
Viewing or utilizing information on this website, or contacting or responding to our offices or investment adviser representatives does not create an investment advisory relationship of any kind. An investment advisory relationship can only be established and investment advice can only be provided after the following three events have been completed: (1) LCM’s thorough review with you of all the relevant facts pertaining to a potential engagement; (2) the execution of a written LCM engagement and fee agreement; and (3) delivery of the LCM Form ADV disclosure brochure.
For more information, please see our ADV.
