Equity Strategies

“We believe our dividend strategy is compelling. Dividends receive preferential tax treatment, which makes dividend-paying stocks highly competitive with most alternative investments after taxes. These stocks should also benefit from an aging demographic that is seeking income in a world where there is so little yield in terms of savings accounts, money market funds, and CDs.”

Lederer & Associates manages two distinctive styles of equity portfolios. Our Growth strategy is based on Growth at a Reasonable Price and is focused on mid- to large-cap companies with the potential to provide long-term capital appreciation. Our Equity Income strategy is dedicated primarily to large caps with an emphasis on dividends, dividend growth, and total return. The Growth strategy is for more aggressive investors while the Equity Income strategy is for more conservative investors. We also offer a blended Growth and Income approach for clients desiring a combination of our two core strategies.

The firm utilizes qualitative and quantitative analysis when evaluating investment securities. Our stock selection process focuses on three fundamentals: quality, growth, and value. We maintain that the intersection of quality, growth, and value equals opportunity. We do not believe quality, growth, or value is sufficient on a standalone basis to justify buying a stock. For example, a high-quality company may lack the growth prospects we desire. A fast-growing company may not represent good value. A company that sells at a low valuation may lack sufficient quality.

We measure quality in terms of market position, financial strength, cash flow generation, competitive advantages, and the track records of management. Powerful and durable competitive advantages create a moat around the business, which serves the dual purpose of keeping competitors at bay and enabling the company to reap extraordinary profits and growth. These advantages generally involve being the low-cost producer and/or having a differentiated product or service.

We generally own about 25-50 stocks in our equity portfolios. We reduce or sell positions once the upside potential has diminished due to high valuation, low yield, or deterioration in the competitive advantage and fundamental outlook. We may also sell a stock when there are better opportunities elsewhere. Our sell disciplines help limit downside risk while keeping the portfolio fresh with our best ideas.