Investor Relations Communications Plan
EXECUTIVE SUMMARY
1.
Goals:
o Attract longer-term investors
o Stabilize investor base
o Build value for shareholders
2.
Target highest potential institutional investors for one-on-one marketing:
o Concentrate on small- to mid-cap value oriented portfolios
o Highly selective approach
o Requires management accessibility
3.
Market aggressively to individual investors:
o Market through BetterInvesting (also known as the National Association of
Investors Corp.)
o Capitalize on consumer appeal and familiarity
4.
Increase analyst coverage:
o Target brokerage houses with strong institutional sales
o Address regional brokerages first to build credibility
5.
Program:
o Initial program runs nine months
o Initial program cost: [Insert estimate]
Investor Relations Communications Plan
1.
Goals
o Attract long-term investors
o Stabilize investor base (reduce volatility)
o Build value for shareholders
2.
Observations and Situation Analysis
Volatility deters value-oriented investors whose longer-term orientation tends to stabilize
trading and support sustained price appreciation.
Telecom stocks in general exhibit higher than average volatility; XYZ Corp.’s volatility
is in the mid range for telecom peers (Table 1)
XYZ Corp. tends to have a higher percentage of short sellers and lower percentage of
institutional ownership than peer companies (Table 2)
Among peer companies reviewed, XYZ Corp. is among those with the highest percentage
of low and moderate turnover institutional investment and the lowest percentage of high
turnover (Table 3)
Although institutional interest is constrained by difficulty in taking large positions, there
is potential institutional interest in XYZ Corp.:

76 institutional portfolios with low to moderate turnover, Value, GARP or
Specialty investment styles, and positions in 2 or more lower-cap peers, but
not XYZ Corp. (Table 4, institutional investment style definitions in Appendix
3)

50 mutual funds with low to moderate turnover, Value, GARP or Specialty
investment styles, and positions in 2 or more lower-cap peers, but not XYZ
Corp. (Table 5, institutional investment style definitions in Appendix 3)
Low level of institutional holdings, partially due to high percentage of inside holdings
Small-cap funds most likely receptive to stocks with limited float
Potentially strong consumer franchise favors addressing retail market, but not all
participants in retail market are suitable targets; media hype creating lottery mentality
BetterInvesting offers opportunity to reach stable individual market, but approach favors
dividend reinvestment
XYZ Corp. has only one analyst with coverage (Table 6)
Increased analyst coverage tends to increase P/E as well as build reservoir of potential
investors
3.
Messages
o XYZ Corp. has turned the corner
Eliminated under performing operations
Gross margin improving
Balance sheet is sound
o Value-building strategy
Capitalize on global presence
Emphasize gross margin rather than revenue growth
Branded services
Accessories
4.
Strategy
o Encourage long positions

Target institutions which hold peer companies but not XYZ Corp., select
small cap funds and others

Address individual Investors through Corporate website and
BetterInvesting
o Increase analyst coverage
o Strengthen Market Maker relationships
o Counter short interest by building shareholder loyalty as well as value
5.
Tactics
A - To encourage long positions
(1) Institutional Investors
a - Identify holders of peers but not XYZ Corp.
b - Identify high potential small cap funds
c - Mail and personal contact campaign
Meetings with fund managers (groups or one-on-one) in key cities
in region, then around U.S. -- three or four days per month
Direct mail to top prospects and holders of large positions (see
Appendix 1)
d - Conference participation
Institutionally sponsored
Commercially sponsored
e - Work with Marketing establish industry leadership image
Press articles/interviews
Expert spokespersons
Reprints of articles by/about XYZ Corp.
f - Message articulation
Short (20 minute) and long (40 minute) format standard chart
presentations for use at conferences and key city meetings
(2) Individual Investors
a - Use IR web page to promote value of XYZ Corp. investment by
demonstrating a strong commitment to shareholders
- IR Mission statement
Treat shareholders as partners
Open communication
- Comments from management
Strategy
Milestones
- Conference information (date, time, call-in number)
- Quarterly results release dates
- Industry trends
- Technology updates
- Any other useful, interesting, non-material information
b - Link to BetterInvesting from corporate IR page
c - Emphasize home state (or region) BetterInvesting Chapters
Participate in Investor Fairs
Visit a meeting of each club
Letter and phone contact to follow-up
d - Extra level of service in lieu of dividend (e.g., conference
call for individual investors to meet with management)
e - Plain English quarterly reports to shareholders in summary form.
Post on web page, email and fax. Include instructions on
accessing 10-Q either on web or requesting hard copy.
B - Increase analyst coverage
(1) Target regional brokerages with strong institutional sales
(Appendix 2) as well as national firms
(2) Add to news release and conference call fax lists
(3) Phone and direct mail to establish contact
(4) Meetings with management
(5) Analyst Day - presentations and tours
C – Strengthen market maker relationships
(1) Address top five (over 50% of trading activity)
(2) NASDAQ can assist with introductory meetings
(3) Add to news release and conference call fax lists
(4) Phone and direct mail follow-up
(5) Meetings with management
D - To counter short interest -- build shareholder confidence and loyalty
1. Use IR website to promote value of XYZ Corp. investment by demonstrating
a strong commitment to shareholders
a - IR Mission statement
Treat shareholders as partners
Open communication
b - Comments from management
Strategy
Milestones
c - Conference information (date, time, call-in number)
d - Quarterly results release dates
e - Industry trends
f - Technology updates
g - Any other useful, interesting, non-material information
2. Offer all investors (including individuals) opportunity to listen to conference
calls, ask questions and receive copies of all news releases
3. Plain English quarterly reports to shareholders in summary form. Post on
website, email and fax. Include instructions on accessing 10-Q either online
or requesting hard copy.
6. Measurement
7. Changes in ownership and analyst coverage are indicators most closely linked to Investor
Relations communications
8. Implementation
9. Budget
Program Elements…………………….$162,000 (see Table 8 for a program budget)
Technical Resources…………………. 32,000
$194,000
Table 1
Volatility: XYZ vs. Peers
Beta Coefficient
ABCD
0.47
EFGH
0.56
IJKL
0.62
MNOP
1.19
QRST
1.21
UVWX
1.27
XYZC
1.31
DCBA
1.39
HGFE
1.43
LKJI
PONM
TSRQ
XWVU
Source: I/B/E/S
1.49
2.01
2.07
2.86
Table 2
Ownership Profiles
Peer
Co.
Ticker
Inst.
Insider
Short
%
%
Approx.
Approx.
Short
Shares Out
% of
% of
Balance
of
of Inst. Shares
Insider Shares
Shares
Ttl
Ttl
Ttl
Ttl
PONM 761,800,000 1,250 58%
59%
% 21,800,000
%
UVWX 2,180,000,000 2,254 51% 1,111,800,000 11% 239,800,000 2% 40,500,000 787,900,000 36%
TSRQ 55,700,000 213 50% 27,850,000 12%
6,684,000
2% 1,140,000 20,026,000 36%
DCBA 932,300,000 1,167 45% 417,804,000 49% 455,096,000 6% 59,400,000
0
0%
EFGH 2,700,000,000 2,612 44% 1,188,000,000 1%
27,000,000 1% 16,300,000 1,468,700,000 54%
LKJI 753,400,000 1,394 40% 301,360,000 7%
52,738,000 1% 9,660,000 389,642,000 52%
XWVU 27,100,000 213 40% 10,840,000 19%
5,149,000
4% 1,150,000 9,961,000 37%
MNOP 4,690,000,000 1,527 23% 1,078,700,000 1%
46,900,000 0% 9,070,000 3,555,330,000 76%
XYZC 60,142,000 88 22% 13,231,240 46% 27,665,320 3% 1,780,000 17,465,440 29%
IJKL 85,800,000 239 17%
89%
% 3,240,000
%
HGFE 2,310,000,000 291 11% 254,100,000 84% 1,940,400,000 1% 15,900,000 99,600,000 4%
ABCD 7,830,000,000 772 8% 626,400,000 77% 6,029,100,000 0% 9,900,000 1,174,500,000 15%
Source: Market Guide
# of
inst.
Table 3
Institutional Investor Turnover
Low
Moderate
QRST
40
37
ABCD
36
40
UVWX
36
39
XYZC
41
33
MNOP
33
40
IJKL
30
40
LKJI
31
39
TSRQ
36
34
DCBA
31
37
XWVU
28
37
EFGH
36
28
HGFE
26
37
PONM
27
36
Source: NASDAQ Online
High
23
24
25
26
27
30
30
30
32
35
26
37
37
Table 4
Selected Institutional Targets (Positions in two or more small to mid cap XYZC peers)
Name
Turnover
Style
Type of Company
Franklin Advisers, Inc.
M
Income Value Banks & Trusts
Merrill Lynch & Company Inc.
M
Specialty
Research Firms
Mellon Equity Associates, LLP
M
Core Value
Investment Advisors
Franklin Portfolio Associates L.L.C.
M
Deep Value
Investment Advisors
Renaissance Technologies Corp.
L
Specialty
Hedge Funds
Delphi Management, Inc.
L
Deep Value
Investment Advisors
Pinnacle Associates Limited
M
GARP
Investment Advisors
Anchor Capital Advisors, Inc.
M
Deep Value
Investment Advisors
Goldman Sachs & Company
M
Specialty
Research Firms
AAL Capital Management Corporation
M
GARP
Investment Advisors
First Manhattan Capital Management
L
GARP
Investment Advisors
WM Advisors Inc.
M
GARP
Investment Advisors
Lord, Abbett & Co.
M
Income Value Investment Advisors
Wallace R. Weitz & Company
M
GARP
Investment Advisors
Morgan Stanley Dean Witter Invt. Mgmt.
M
GARP
Investment Advisors
(MAS)
Dreyfus Corporation
M
GARP
Investment Advisors
Evergreen Institutional Asset Management
L
Core Value
Banks & Trusts
Smith Barney Asset Management
L
GARP
Investment Advisors
Virginia Investment Counselors
L
Core Value
Investment Advisors
Morgan Stanley Dean Witter Invt. Mgmt.
M
GARP
Investment Advisors
U.S. Bancorp Piper Jaffray Asset Mgmt. (MN)
M
Core Value
Banks & Trusts
Zurich Scudder Investments, Inc.
M
Core Value
Investment Advisors
T. Rowe Price Associates, Inc.
M
GARP
Investment Advisors
Heartland Advisors, Inc.
M
Deep Value
Investment Advisors
Merrill Lynch Investment Managers (NJ)
M
Deep Value
Investment Advisors
Raymond James & Associates, Inc.
M
Specialty
Investment Advisors
Fidelity Management & Research
M
GARP
Investment Advisors
Teacher Retirement System of Texas
L
GARP
Pension Funds
Texas Employees' Retirement System
M
Core Value
Pension Funds
Bank of Oklahoma
M
Income Value Banks & Trusts
First National Bank of Southwest Ohio
L
Core Value
Banks & Trusts
Lyon Street Asset Management Company
L
Income Value Banks & Trusts
Kahn Brothers & Company Inc.
L
Deep Value
Investment Advisors
Federated Investors, Inc.
M
Core Value
Investment Advisors
Dean Investment Associates
M
Core Value
Investment Advisors
Banc of America Capital Management, Inc.
M
Core Value
Banks & Trusts
Morgan Guaranty Trust Corp.
M
Core Value
Banks & Trusts
Ragen MacKenzie Inc.
M
Specialty
Research Firms
Fleet Investment Advisors, Inc.
L
GARP
Banks & Trusts
Banc One Investment Advisors Corporation
M
Core Value
Banks & Trusts
Manchester Capital Corporation
L
Core Value
Investment Advisors
Sandler Capital Management
M
Specialty
Investment Advisors
Ohio Public Employees' Retirement System
Ayco Company
Lazard Asset Management Ltd.
Roll & Ross Asset Management
Associated Bank N.A.
Victory Gradison Capital Management
Ohio State Teachers' Retirement System
Gofen & Glossberg, L.L.C.
Prudential Securities, Inc.
Northern Trust Company of Connecticut
Parametric Portfolio Associates, Inc.
Royce & Associates, Inc.
U.S. Trust Corporation
Qwest Management
Wesbanco Bank Wheeling
BNY Asset Management
Shufro, Rose & Co. LLC
Citizens Investment Services
Legg Mason Wood Walker, Inc.
Morgan Stanley Dean Witter Advisors, Inc.
RBC Dain Rauscher Wessels
Capstone Asset Management Company
National City Corporation
Deere & Co.
Travelers Investment Management Co.
(TIMCO)
Advest Group
Manufacturers Advisers Corporation (Toronto)
CIBC World Markets Corp.
J.P. Morgan Private Bank
Hilliard Lyons Investment Management
HSBC Asset Management
Firstar Bank N.A.
Wells Fargo Bank, Iowa N.A
AIB Investment Managers Ltd. (Dublin)
Source: NASDAQ
L
M
M
M
M
M
L
L
M
M
M
M
L
L
M
L
M
L
M
M
M
L
L
M
M
GARP
GARP
Core Value
Core Value
GARP
GARP
Core Value
Core Growth
Specialty
GARP
Deep Value
Deep Value
Core Value
Core Value
Core Value
Income Value
Deep Value
Core Value
Specialty
Core Value
Specialty
Core Value
Core Value
GARP
Core Value
Pension Funds
Investment Advisors
Investment Advisors
Investment Advisors
Banks & Trusts
Investment Advisors
Pension Funds
Investment Advisors
Research Firms
Investment Advisors
Investment Advisors
Investment Advisors
Banks & Trusts
Pension Funds
Banks & Trusts
Banks & Trusts
Investment Advisors
Banks & Trusts
Research Firms
Investment Advisors
Research Firms
Investment Advisors
Banks & Trusts
Pension Funds
Investment Advisors
M
M
M
M
L
M
M
L
M
Specialty
GARP
Specialty
Core Value
Core Value
Core Value
Core Value
Core Value
GARP
Research Firms
Insurance Co.s
Research Firms
Banks & Trusts
Investment Advisors
Banks & Trusts
Banks & Trusts
Banks & Trusts
Investment Advisors
Table 5
Selected Mutual Fund Targets (Positions in two or more small- to mid-cap XYZ peers)
Name
Turnover
Style
GCG Trust - Capital Growth Series
M
GARP
UBS (Lux) Equity Fund – Technology
M
Specialty
Franklin Global Communications Fund
M
Specialty
Gabelli Global Telecommunications Fund
L
Specialty
INVESCO Telecommunications Fund
M
Specialty
Franklin Templeton VIP Franklin Global Comm.
M
Specialty
Secs.
Vanguard Windsor II Fund (Dallas)
L
Income Value
Weitz Partners Value Fund
M
GARP
Heartland Value Fund
L
GARP
WM Mid Cap Stock Fund
L
N/A
Prudential Small Company Fund, Inc.
M
Core Value
Wasatch Small Cap Growth Fund
L
GARP
Van Kampen American Value Fund
M
Income Value
Fidelity Select Wireless Portfolio
L
Specialty
iShares Dow Jones US Telecom Sector Index Fund
M
Specialty
Weitz Value Fund
M
GARP
Kent Small Company Growth Fund
L
GARP
Putnam Utilities Growth & Income Fund
M
Specialty
Gabelli Small Cap Growth Fund
L
GARP
AIM Global Telecommunications Class
M
Specialty
DFA U.S. 6-10 Small Company Series
L
Index
StrategicNova U.S. Midcap Value Fund
M
GARP
Kemper Small Cap Value Fund
L
GARP
Kobren Delphi Value Fund
M
Core Value
Gabelli Global Multimedia Trust Inc.
L
Specialty
Scudder Small Company Value Fund
M
Deep Value
Northern Global Communications Fund
M
Gabelli Asset Fund
L
Core Value
Protective CORE U.S. Equity Fund
M
Deep Value
Goldman Sachs Funds US CORE Equity Portfolio
M
Specialty
TIFF U.S. Equity Fund
M
Deep Value
Gabelli Equity Trust, Inc.
L
Core Value
Evergreen Utility and Telecommunications Fund
L
Specialty
Advance Capital I Equity Growth Fund
L
GARP
Gabelli Global Opportunity Fund
M
N/A
Undiscovered Managers Behavioral Value Fund
M
Deep Value
USAA Small Cap Stock Fund
M
Legg Mason U.S. Small-Capitalization Value Trust
M
Deep Value
Vanguard Tax-Managed Small-Cap Fund
M
GARP
Target Portfolio Trust-Small Capitalization Value
M
Core Value
Delaware Pooled Small-Cap Growth Equity
M
Portfolio
Elliott & Page American Growth Fund
M
GARP
Guardian Investor-Gabelli Capital Asset Fund
M
GARP
JPVF Small Company Portfolio
M
GARP
Chase Vista Capital Advantage - Capital Growth
Scudder Variable - Scudder Small Cap Value Port.
JP Morgan Investment - JPM USD Global Balanced
CG Capital Markets Fund Small Cap Value Equity
T. Rowe Price Total Equity Market Index Fund
Advance Capital I Balanced Fund
Source: NASDAQ
M
M
M
M
L
L
GARP
GARP
Core Value
Deep Value
GARP
Core Value
Table 6
Analyst Recommendations
Strong
Peer Company (Ticker)
Buy (1)
XWVU
DCBA
EFGH
LKJI
PONM
HGFE
MNOP
IJKL
TSRQ
ABCD
UVWX
XYZC
Source: Zacks
5
16
12
8
8
5
8
2
1
2
Buy (2)
2
9
3
10
10
10
13
5
3
8
11
Neutral
(3)
Total
Recommendations Consensus
2
3
2
3
3
5
3
2
11
10
1
7
27
18
20
21
18
26
10
5
20
23
1
Table 7
Market Maker Volume:
Knight Securities
Schwab Capital Markets
Herzog, Heine, Geduld
Legg Mason Wood Walker
Susquehanna Capital Group
McDonald & Co. Sec. Inc.
Island System Corporation
Raymond James & Associates
Sherwood Securities Corp.
Tucker Anthony Incorporated
Spear, Leeds & Kellogg
Merrill Lynch
B-Trade Service LLC
Jefferies & Company
Cantor, Fitzgerald & Co.
REDIBook ECN LLC
Midwest Stock Exchange
ABN AMRO Securities (USA)
Bank of America Securities
The Brass Utility
% of Total
15.8%
11.0%
8.9%
7.1%
6.5%
5.1%
5.0%
4.1%
3.3%%
3.2%
2.8%
2.2%
1.8
1.7%
1.7%
1.6%
1.3%
1.2%
1.1%
1.0%
12 Month Total
17,726,588
12,344,113
9,956,671
7,988,534
7,272,433
5,685,036
5,600,771
4,637,603
3,727,791
3,614,863
3,158,224
2,459,886
1,992,040
1,947,648
1,896,202
1,786,262
1,472,055
1,339,109
1,237,399
1,143,958
1.3
1.5
1.5
1.7
1.8
1.9
2.0
2.1
2.4
2.5
2.5
3.0
First Union Securities
1.0%
Southwest Securities Inc.
0.9%
Fidelity Capital Markets
0.9%
ING Barings Furman Selz, LLC
0.9%
Sanders Morris Harris Inc.
0.8%
Salomon Smith Barney
0.7%
Millennium Securities Corp.
0.7%
Arichipelego
0.6%
Ladenburg, Thalmann & Co.
0.6%
25 MisTSRQaneous Market
2.7%
Makers
Non-registered Market Makers
4.1%
Total
100%
Source: NASDAQ
Italic = ECN
1,086,171
1,012,312
962,173
961,323
918,219
758,603
753,143
697,783
650,634
2,986,500
4,566,789
112,340,836
Table 8
Strategy/Tactics Budget
Strategy: Encourage Long Positions
Tactics:
Institutions
Individuals
Targeting study & analysis
1
Web Page
1
1
Mission Statement
1
1
Conference Calls
1
1
Webcast conference calls
1
1
Expanded Fax Distribution
1
Management Presentations
1
Regional Meetings
1
Sponsored Conferences
1
Spokesmanship/Interviews
1
1
Article reprints
1
NAIC Membership
1
NAIC chapters (Texas)
1
Greensheet
1
Annual Conference
1
Phone and Direct mail
Fax/Conference Call
follow-up
Analyst visits
Analyst Day
1 = primary
2 = secondary
Increase
Coverage
Market
Maker
Relationships
Counter
Short
Interest
2
2
1
1
1
1
2
2
2
1
2
1
1
1
1
1
1
1
2
2
2
2
1
1
1
1
1
1
2
Budget
$20,000
5,000
3,000
4,000
500
2,000
36,000
20,000
7,000
1,000
7,000
4,500
15,000
10,000
7,000
20,000
$162,000
Appendix 1 – Direct Mail to Institutions & Mutual Funds
Monthly mailings to include:
1.
Letters from XYZ Corp. Management:
CEO – Growth strategy and outlook
COO – Overview of operations
CFO – Financial performance and key metrics
Regional Management – Region overviews
2.
Article reprints, news releases with cover letter
3.
Non-material background data (e.g., product mix by technology) with cover letter
4.
Product sample with cover letter on marketing strategy
5.
Marketing CD (or USB flash drive) and cover letter on value-added services
6.
7.
Order flow schematic to illustrate unique service capabilities with cover letter on XYZ
Corp. capabilities
Occasional mailing of promotional product with XYZ Corp. logo imprint
Appendix 2 – Targeted Analysts
Regional:
Regional Firm A, Analyst Name
Regional Firm B, Analyst Name
Regional Firm C, Analyst Name
Regional Firm D, Analyst Name
Regional Firm E, Analyst Name
Regional Firm F, Analyst Name
National:
National Firm A, Analyst Name
National Firm B, Analyst Name
National Firm C, Analyst Name
National Firm D, Analyst Name
Appendix 3 – Investment Style Definitions
In Nasdaq Online, there are 13 possible styles, defined below, by which institutional investors
are classified by the source of the data, the Carson Group. The Carson Group employs
quantitative techniques based on key financial fundamentals of an investor's portfolio: primarily,
the portions of the portfolio above the weighted average of the S&P 500 for price-to-earnings
ratio, dividend yield, price-to-book ratio, and five year estimated earnings per share (EPS)
growth.
An institution must generally meet all the criteria for a given style. In some cases, however, the
securities that an investor is buying and/or selling currently provide a better indication of the true
investment style being employed. If a portfolio is not available for a given investor, the Carson
Group applies its unique knowledge of the investor's behavior to accurately classify its dominant
style. For "Global" investors, a specific style has been given which is based on a review of the
North American securities held in the portfolio.
The 13 possible investment styles are as are as follows:
Aggressive Growth -- Aggressive growth investors employ an extreme version of the growth
style. Their aggressiveness may be defined primarily by holding stocks in companies that are
either growing extremely quickly, are in an early stage of their life cycle, and/or have minimal or
no current earnings. In general, Aggressive Growth investors have higher portfolio turnover than
most investors, as their style requires them to react quickly as new information becomes
available that is either positive or negative concerning growth rates.
Core Growth -- As the name suggests, these managers invest in large, blue chip companies
that have historically performed at or near the top of the S&P 500 in terms of earnings and
revenue growth. As a result, Core Growth investors are often willing to pay up for these blue
chip companies, purchasing issues that trade at higher price-to-earnings and price-to-book
multiples. As an example, companies in the Pharmaceutical and Consumer Product industries
often are heavily weighted in Core Growth investor's portfolios. Core growth investors usually
have a long term investment horizon, as they employ a buy and hold strategy.
Core Value -- Investors with this investing style focus on buying securities at relatively low
valuations on an absolute basis or in relation to the market or historical levels. Value portfolios
typically exhibit below-average price-to-earnings, price-to-book and price-to-cash flow
multiples. In addition, growth and profitability characteristics are frequently below market
averages, but with an expectation for improved future performance. Core Value investors
typically invest in industries such as Energy and Financials, which trade at discounts to the
general market, but perform consistently over the long term. This style is similar to Core Growth,
as Core Value investors also try to employ a buy and hold strategy--holding issues until their
valuations start to approach or exceed market multiples.
Deep Value -- This style is a more extreme version of value investing that is characterized by
holding the stocks of companies with extremely low valuation measures. Often these companies
are particularly out-of-favor or in industries that are out-of-favor. Some investors in this category
are known for agitating for changes such as new management, the sale of assets or a spin-off.
This group of investors is sometimes categorized as "contrarian," as they usually invest in
companies whose prospects are regarded as negative by the rest of the market.
Emerging Markets -- This style refers to those money managers investing the majority of their
equity assets in stocks of companies domiciled outside of North America. In most cases, the
North American portion of the portfolio is either too small or does not exist, precluding The
Carson Group from determining an accurate investment style based on the fundamentals of these
companies. For "Global" investors which have more significant North American holdings, a
specific style may be given which will apply primarily to the North American portion of the
portfolio.
Growth at a Reasonable Price (GARP) -- As the name suggests, GARP investors try to build
their portfolios with securities that are trading at a discount to the market, but are expected to
grow at higher rate than the market average. This is a more conservative investment style in
comparison to an outright growth-oriented strategy. In addition, dividend yield is generally not a
concern of GARP investors.
Growth -- Growth investors bridge the gap between the Aggressive Growth and Core Growth
investment styles. They tend to be slightly more aggressive than Core Growth investors, willing
to pay slightly higher multiples for stocks and trade at a more active pace. In general, they are
looking for companies growing at superior rates than the general marketplace, but are unwilling
to pay for extremely high multiples.
Income Value -- These investors are similar to those employing the Core Value style except
that they place an emphasis on buying issues with higher than average dividend yields.
Index -- These investors generally create portfolios which are designed to match the
composition of a broad-based index such as the S&P 500, the Wilshire Small Cap, and the
Russell 3000. Therefore, the performance and risk of the portfolio mirrors the general market.
Their investment decisions are driven by indices, not by an evaluation of the companies or their
securities. The Carson Group categorizes these funds based on the firm's historical investment
behavior.
International & Emerging Markets -- These investors focus the majority of their investments
outside of North America, particularly Western Europe and Japan.
Momentum -- These institutions invest in stocks when their earnings, earnings estimates, or
prices are advancing at a faster rate than the market or other stocks in the same sector.
Momentum investors generally look for stocks experiencing upward earnings revisions or are
producing positive earnings surprises. Most of the investors in this category have very high
portfolio turnover rates due to a short-term focus, and therefore will liquidate positions at the
slightest hint of a disappointment or deceleration. The Carson Group categorizes these funds
based on the firm's historical investment behavior.
Specialty -- Specialty investors tend to have a narrowly-defined investment universe, in that
they have pre-determined biases towards certain companies, industries or sectors, regardless of
their financial characteristics. Examples include investors that specialize in specific industries or
hold a particularly high concentration of a single stock or a very small set of stocks, or specialize
in convertible securities. The Carson Group categorizes these funds based on the firm's historical
investment behavior.
Yield -- Yield investors focus on companies with yields that are well above-average and on
their ability to continue making or increasing dividend payments. Investors that fall into this
category tend to focus on income and safety more than on capital appreciation.
Beta (Nasdaq definition): A statistical measure of a stock’s volatility compared with the
overall market. A beta of less than 1 indicates lower risk than the market; a beta of more than 1
indicates higher risk than the market.
Beta (I/B/E/S definition): A measure of the sensitivity of a stock’s price to the movement of
an index (S&P 500). In I/B/E/S, the Beta factor is the slope of a straight line fitted to 156
observations of weekly relative price changes. These observations are equal to the ratio of the
weekly percent price change in a particular stock to the weekly percent change of the S&P 500.