Mr. Farr: We are long-term growth managers; 80 percent of our portfolio will be in large cap blue chip stocks, and 20 percent in smaller growth names. The small cap is rare in our portfolio. We are GARP investors -- Growth At A Reasonable Price. We like to buy stocks with p/e's at a discount to their growth. We look for strong management and many years of increased earnings history. We tend to hold companies for quite a while. We are tax-sensitive in the way that we invest, so we will buy and hold a portfolio as long as the fundamentals are in place. We try to talk to the management of every company that we own, regularly. We look for the long-term growth, and we believe in total return.
TWST: The next question has partially been answered already, and that is
your investment philosophy.
Mr. Farr: We think that everybody is a total return investor; even
income investors are total return investors. They want the most number
of dollars adjusted for tax and risk at the end of an investment cycle.
Therefore, we invest primarily in equities, even for income investors,
and recommend that clients with enough of a portfolio to diversify, both
in terms of names and in terms of risk, invest in stocks and take a
regular distribution, whether it's from the dividend or from the growth
of the principal. Better, we think, to spend 5 percent of an account
that's growing at 10 percent a year than spend 5 percent of a bond
that's not growing and paying 6 percent a year, because then you are
losing money; you're not even keeping up with inflation. So we believe
in the total return philosophy, and we believe in a low turnover because
we are tax-averse.
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