LVM's Investment Philosophy
LVM believes that each client’s investment goals and objectives are unique and achievement of those objectives requires an individualized portfolio. A critical aspect of portfolio management is matching the risk profile of the portfolio to each client’s objectives.
The LVM approach stresses security selection through quantitative and fundamental analysis. In analyzing the stock of a company, the following characteristics are desired:
High and sustainable return on equity and well-defined growth prospects
Strong balance sheets
A unique niche for the company
Valuation is probably the most important parameter to consider when committing capital to a business. When a stock is purchased, one is buying a business; one in which LVM believes the future value of the cash generated will end up being more than the current value of the dollars paid. The wider the gap is between the current value (price) and the intrinsic value, the higher the return. If one overpays for future earnings, an investor will either lose money or suffer through mediocre returns until the point where the valuation becomes attractive relative to the intrinsic value.