Investment Process

Our Investment Process

Peninsula Asset Management screens companies proposed for investment using fundamental and quantitative analysis. We evaluate them according to their growth, profitability, and value characteristics based on measures, including revenues, earnings, cash flow, dividend payout and return on equity. These are standard yardsticks used to measure stocks. We look carefully at each company’s business, its history and its industry, in an effort to assess the company’s prospects for growth.

The Fluctuation of Stocks

Peninsula Asset Management recognizes that all stocks, including those of high-quality companies, go through cycles that include periods of relative weakness. These periods may be viewed as buying opportunities rather than selling triggers.

There are four cases where we may sell a stock in client portfolios:

  • Intrinsic Value Attained. The price target has been reached and we cannot make a case for further multiple expansion, raising earnings estimates or additional investment catalysts.
  • Opportunity Cost. At a specific point in time, another security may look more attractive on a risk/reward basis. Thus, our clients would incur a potential opportunity cost if we failed to make the switch.
  • Deterioration in Fundamentals. Visible degradation in company or industry-wide fundamentals. For example, we would sell if sales growth unexpectedly and materially slowed, the sales mix deteriorated, pricing power was adversely impacted, anticipated product introductions were delayed, bellwether competitors or supplier fundamentals were hinting at a degrading situation in the future for our target company, etc. Additionally, if the rationale underpinning our investment thesis no longer seems reasonable, then we sell.
  • Stock Price Rolling Over. Price performance is degrading relative to a company's peer group and/or the industry relative strength rolls over compared to the broader benchmark. When this occurs, we go back and do further investigation. If the adverse trend continues, we may sell.

Bringing it All Together

Peninsula Asset Management actively reviews and rebalances client portfolios as necessary to ensure that we have closely monitored portfolios to offer our clients. New ideas are added while we prune old ideas that may no longer be working. Client contact and subsequent adjustments based upon changes in individual client circumstances completes the investment process feedback loop.

For more information, or to schedule a consultation, call us today at 941-748-8680.

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