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| Oak Tree Portfolio Management |
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Providing investment advisory services to individuals, families, institutions and retirement plans since 1992 as a division of Chapin Davis, Oak Tree Portfolio Management assists its clients in the accumulation of capital through a disciplined value approach.
Portfolio Management
Oak Tree defines an investor's objectives in terms of risk and reward. The professionals at Oak Tree quantify the amount of risk taken in equities, using a conservative laddered approach to bond management and marking constraints in terms of parameters such as time horizons, liquidity needs, legal issues, and special situations (e.g. education, bequests, helping family members or anything from buying a new car to replacing a roof).
Each portfolio is monitored along with market conditions. AIMR complaint performance results are reported quarterly and compared against an appropriate benchmark index. The investment objective requires a disciplined, consistent approach to managing assets.
Investment Philosophy
Value investing is Oak Tree's philosophical approach to asset management and is an inherently conservative way to build assets over time. Through a disciplined approach of buying undervalued and out of favor stocks, value investing has produced greater returns over the past 70 years than growth stock investing, and with less risk. Our managers see opportunity when market expectations are low for a company whose earnings have faltered, particularly when it has occurred for a longer period of time. Being patient and not buying overvalued stocks of good companies but rather waiting until the stocks decline takes a disciplined approach to investing.
Equity Selection Process
Oak Tree pursues a fundamental, value-oriented approach to security selection, an approach that would generally not involve the use of current Wall Street "favorites." Some characteristics of undervalued, out-of-favor equities are low financial ratios such as: price/earnings, price/book value, price/sales, price/cash flow ratio and a higher than average dividend yield.
Using these parameters along with other value characteristics, potential stocks are further researched and evaluated from a risk/reward basis. When stocks are acquired, our managers establish a future price target and a near term downside price, thus defining a risk-reward ratio. As a stock reaches 75% of its price target, it is re-evaluated and might be sold. Stocks that are nearing or exceeding their price target become a source of funds for new investments. Oak Tree emphasizes performance over a full market cycle due to the inherent uncertainty in investing and generally holds stocks two to five years.
It is clear that intensive research is the key to Oak Tree's success. Our goal is to earn better returns than the overall market as measured by the S&P 500 while minimizing the risk taken.
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