The Guerite Strategy is a very flexible investment strategy.  It may be applied to any domestic equity portfolio (common stocks, ETF's, mutual funds, and/or any combination thereof).  Guerite chooses to apply the Guerite Strategy to a traditional value-oriented equity portfolio.  Guerite believes that the combined benefits of an absolute return strategy together with a value-oriented equity portfolio can yield very attractive long-term investment returns at lower volatility than a buy and hold, long-only portfolio.

Academic studies have shown that value-oriented stock selection has consistently, over time, outperformed other investment methods.  Additionally, the downside protection that value stocks tend to offer, particularly during periods of high-risk market conditions, complements Guerite's overall objective to preserve capital during such periods.

Guerite believes that the same valuation forces that affect the overall stock market impact individual stocks. That is, individual stocks swing from periods of excessive optimism to periods of excessive pessimism.  (Witness the wide swings in valuation of many technology stocks from the rise in the mid-1990’s to the 2000 peak and back to the 2003 trough.) 

Guerite's value-oriented stock selection is intended to capture this moving valuation phenomenon of individual stocks migrating from a position of undervaluation to overvaluation.  Such swings take time (as evidenced by the duration of secular markets in the overall market), sometimes necessitating multi-year holding periods.  As a result, the equity portfolio could experience periods of underperformance (when measured against market indices) as Guerite waits for individual components of its investment portfolio to return to fair value.  Over market cycles, however, Guerite expects its value-oriented stock selection strategy to exceed the market indices.

Guerite's primary stock selection methodology focuses on individual companies or market sectors that are selling at discounts to historical multiples, as well as other selection criteria.  Guerite seeks to have a diversified portfolio which avoids concentrated investment positions with regard to individual companies and individual industries.  Guerite invests in equity securities traded on U.S. exchanges (including ADR's) and is not limited to capitalization or industry.

In addition to or in place of individual stock selection, Guerite may use alternative investments such as ETF's and/or mutual funds.  These alternative investment tools allow Guerite a cost effective way to gain specific industry, sector, valuation, capitalization or other investment criteria exposure, without the need for specific company selection.  These alternative investment tools would be used to complement or enhance Guerite's equity investments, but would not alter Guerite's value-oriented portfolio strategy.

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