“LARGE CAP CORE”
The “Large Cap Core” product is an actively managed, concentrated U.S. equity portfolio of 40 to 50 large cap companies typically selected from the universe of stocks in the Russell 1000 Large Cap Index.
The portfolio is selected through the use of a highly disciplined, fundamentals based, analytic methodology driven by historic income statement and balance sheet data. This portfolio combines the results of the Large Cap Growth portfolio with the results of the same analytics applied to a similar portfolio of Value oriented stocks. This allows the equity portfolio management team to offer a portfolio balanced with the opportunities of large cap growth coupled with the stability of a value oriented portfolio. WCB’s growth approach focuses on identifying companies with a superior and improving operating history. WCB’s value approach focuses on companies with outsized inherent value characteristics.
In order to achieve this, WCB splits the operating history of a portfolio candidate into four distinct time periods – twenty rolling quarters, twelve rolling quarters, four rolling quarters and the two most recent quarters. WCB’s specific set of income statement and balance sheet criteria and ratios are calculated for each time period and forward weighted. In addition, the price action of the stock itself is a key factor for both the growth and the value portion of the portfolio. The equity portfolio management team performs this analysis in real time on a weekly basis.
As this is a bottom-up, multifactor-driven model, there is no consideration of macro-economic forecasts, traditional Wall Street research or company guidance. Qualitative judgments are introduced as the final portfolio candidates are individually reviewed for any data discrepancies or any ‘hard’ news that might change the facts of the firm's analysis.
Following this fundamental analysis and ranking process, the equity portfolio management team then drives portfolio candidates through WCB’s proprietary Protocol Trading platform in order to achieve optimal initial trade location for a new position in the portfolio. Many companies that are highly ranked on a fundamental basis will initially fail the Protocol test. If they remain in the research results in future research sets, they will be re-evaluated using WCB’s Protocol methodology. WCB’s goal is to have an equally weighted portfolio, but the equity portfolio management team often will leg into a new position over two to four tranches and observe the price behavior after each position entry.
Individual positions will be rebalanced at least twice per year and often each quarter, but the equity portfolio management team will let the winners run and fade before rebalancing them. WCB’s Protocol Trading platform will also allow the equity portfolio management team to exit a position whose market behavior is not in keeping with our fundamental analysis. That position may be re-entered if the fundamental analysis continues to improve, and WCB’s Protocol Trading analysis gives the equity portfolio management team a better trade location.