Investment Philosophy
The mission of Blue Granite Capital (¡°BGC¡±) is to provide
personalized money management services in a tax efficient manner
while protecting multi-generational wealth. Our disciplined
approach utilizes sound, proven methods to preserve capital,
while focusing on the long-term growth, safety and
diversification of our clients¡¯ assets. Asset Allocation is the
cornerstone of our core investment philosophy, providing the
foundation for capital preservation and risk reduction, two
critical elements to investing. Asset Allocation provides the
means to balance both equity and fixed income investments that
in turn enhance returns, reduce risk and generate income.
Statistical studies show that over 90% of a portfolio¡¯s success
is determined by the proper weighting of stocks and bonds Our
core portfolio has been constructed by identifying the ¡°best
companies¡±, especially those that pay significant dividends,
which benefit from globalization, technological breakthroughs,
cost advantages and market leadership. In an era of increasing
stock market volatility, investing in high quality, proven
market leaders has become more prudent. Blue Granite Capital has
the experience, knowledge and resources to provide unparalleled
service within the Charleston community.
Most importantly, a client¡¯s goals must be the driving force
behind any investment strategy. BGC incorporates each client¡¯s
individual requirements and implements them into tailored
investment strategies. BGC efficiently allocates assets, both
equity and fixed income, based upon the client¡¯s risk profile to
maximize returns while minimizing risk and volatility. The
resulting diversification increases the likelihood of capturing
the best appreciation the market can offer while lowering
overall volatility. Empirical evidence clearly shows that over
the past twenty years a portfolio balanced with stocks and bonds
performs nearly as well as one containing 100% stocks, yet
carries only half the risk. BGC will not subject clients to
undue risk where appreciation potential is unwarranted. Simply
stated, we enhance portfolio growth without taking unnecessary
risk to achieve that growth..
BGC¡¯s disciplined research approach concentrates stock
selection from a very thoroughly analyzed group of market
leading companies, in the best position to take advantage of the
expected economic environment. The dominance of these industry
leaders assures financial stability and drives earnings growth.
Earnings growth drives cash flow and value to shareholders. Our
investments focus upon appropriately valued companies that pay
substantial dividends. Our premise is that dividends reflect the
real earnings of a company, demonstrating profitability and
financial strength. Dividend paying companies often have more
stable earnings and formidable balance sheets. Investors over
time have successfully rewarded such companies with exceptional
stock market performance. Shares of companies that pay dividends
tend to be less volatile than the overall market. Of most
significance, the income generated from dividends has
contributed approximately 45% of the total return of the S&P 500
index since 1926. To ignore such a substantial return as part of
a comprehensive strategy would be imprudent. Conservative
investment theory suggests that investors consider a dividend
strategy an integral part of their asset allocation.
Utilizing asset allocation and our stock selection strategy,
BGC inherently seeks to limit losses and reduce risk. The impact
of reducing risk and standard deviation provides an enhancement
to portfolio performance. Our long-term investment outlook
enhances the competitive advantages of the most dominant
companies in their respective industries. When appropriate BGC
will hedge portfolio risk to further protect our client¡¯s
principal
Asset allocation is the key mechanism by which we incorporate
a blend of equities and fixed income into our investment
strategy. An integral part of BGC¡¯s work is selecting specific
stocks and bonds for our portfolios. Of primary concern in
analyzing companies is valuation as measured by a number of
different investment parameters. Ratios such as price to
earnings, price to book value, and operating margins are
evaluated in determining a company¡¯s worth. The growth in a
company¡¯s revenue, earnings, cash flow and dividends provide a
benchmark for determining stock price appreciation. Additional
factors such as industry competition, acquisition and growth
strategies and the current economic environment also impact our
analysis and decision whether to buy a company¡¯s stock. In the
final analysis, all the above factors are considered to
determine whether a company fits our stringent criteria to be
included within our model portfolios.
The fixed income component of the portfolio is determined by
a similar disciplined investment methodology. Factors we analyze
include: agency ratings, debt coverage, debt to equity ratios,
call features, improving credit and the interest spread versus
the Treasury Bond curve. In addition to fundamental credit
research, BGC gauges the economic picture to determine the
correct point on the yield curve and whether to overweight
corporate bonds, asset-backed securities, agency bonds or
treasury bonds. To reduce interest rate risk we employ a
technique known as laddering. By purchasing bonds at both ends
of the maturity spectrum {short & long} price volatility
associated with changes in rates is reduced. The net effect
increases total bond income generated while limiting potentially
negative price movements. In summary, the combination of
fundamental research, security analysis, and macroeconomic
forecasting determine the appropriate security selection for
inclusion in our portfolios.