Portfolio Management
Farr, Miller & Washington works with individuals/families, estates/trusts, foundations, institutions and endowments, and retirement funds providing each with the special attention and insight they need.

Overall Design of Portfolios. Client portfolios are designed to be diversified and to limit risk according to defined client objectives and to perform well over at least a three to five-year business cycle. Individual equity positions are typically 3% to 5% of the total portfolio while industry concentrations are usually limited to 15%. Bond positions will average 10% of the total portfolio with typically no more than 20% of that amount in any single issuer. With this diversified approach, Farr Miller & Washington intends to achieve participation in positive markets and limit exposure to market downturns.

Portfolio Characteristics. As a general rule, securities in a portfolio have above-market growth rates, consistent return on equity and strong levels of cash flow. Additionally, they typically maintain below market price-earnings and debt-to-capital ratios. While the median, market capitalization of the stocks on our core Focus List is approximately 50 billion, we invest in companies with a capitalization between $1 billion and $5 billion where liquidity permits. If you are interested in obtaining more information about our model portfolio, please contact us.

Risk of Market Timing. Market timing does not work. History provides ample proof of this fact. Farr, Miller & Washington attempts to buy undervalued stocks and sells them when they become overvalued or if fundamentals (such as major financial attributes of the company, management structure, Price/Earnings ratio, growth rate) deteriorate.

International Investments.  Although we provide advice regarding international investments and recommend some international exposure, our preference is to invest in domestic companies: Accounting standards are more uniform and domestic companies report their financial status more frequently.

Underlying the issue of international exposure is the question:  “Where do our companies actually derive their revenues?” Of the 40 companies that appear on our Focus List of stocks from which our portfolio managers build portfolios, average contributions from internationally generated revenues account for more than thirty percent of total revenues. While companies such as Colgate, Johnson & Johnson, Exxon, Intel, Motorola, and Hewlett Packard may be viewed as domestic companies, each derives more than fifty percent of its revenues from international sources.