Author: Jack Brown, Laureola Asset Management
Covestor Model: Dividend Payers
Disclosure: None
Laureola Asset Management is an SEC registered investment advisor headquartered in Naples, FL. The firm was founded by Jack Brown who believes in the power of income producing stocks to supplement capital appreciation. Jack is the President of the CFA Society of Naples (2010). Laureola is a Latin word meaning “success.”
Laureola manages Covestor’s Dividend Payers portfolio which attempts to outperform by finding stocks of companies that are trading for less than the company is worth and by focusing on dividend payers. The model aims to be fully invested in US stocks.
Founder Jack Brown had this to say about managing the portfolio in March:
As of this writing, the U.S. stock market as measured by the S&P 500 is fairly valued, according to both our normalized and forward earnings estimates of the market’s fair value. Reality can deviate quite strongly from what’s fair. Despite this, we believe the S&P 500 (NYSE: SPY) will oscillate above and below the low 1,300 range for the next few months.
Consequently, unlike many bulls or bears, we are neutral on the valuation of the market. We continue to believe a tug-of-war will be played out in the stock market. On the plus side, business strength and overall economic activity are in decent shape. On the negative side, we worry about the potential for rising input prices – putting pressure on historically large profit margins.
Last quarter we raised our cash position based on a somewhat cautious, but opportunistic outlook. Our internal metric of “normalized” earnings tells us that the portfolio’s price-to-normalized earnings ratio stands at a considerable discount to the broad market’s. Our internal metric for credit quality indicates that our companies have a solid average credit score that is well above that of the typical S&P 500 company.
