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Portfolio Management

At Clark Asset Management, we focus on portfolio management and portfolio structure.  Our emphasis is on managing Client investment portfolios in accordance with the objectives set forth in the Client’s Statement of Investment Policy.  We manage on a discretionary basis only.  The Client’s account generally resides at Charles Schwab Institutional in the Client’s name, and Clark Asset Management uses a Limited Power of Attorney to manage it.  Fees are on a sliding scale, and begin at about 1.0% per year, decreasing with size of the account.  Fees are negotiable, depending on circumstances.  Our minimum account size is $200K, and we will occasionally work with less if a Client has a special situation and wants to retain our services in a situation where we feel that we can help.

 

Our Philosophy and Foundations

 

There are two cornerstones to our practice of portfolio management.  The first is the academic body of knowledge that is referred to as “Modern Portfolio Theory,” with extensions, especially the Fama-French Model.  From Harry Markowitz to David Dreman to Robert Haugen, there are things to be learned and things to know, which have already been researched by others.  The most important variable affecting overall portfolio risk is the relative allocation between fixed income and equities.  The accumulated body of academic literature also leads us to diversify among asset classes.  A portfolio that is diversified among asset classes will be much more resilient than one that is focused on one area (such as technology of international small cap).  We often use funds from Dimensional Fund Advisors ( www.dfafunds.com ) to diversify among asset classes, and also to implement and benefit from the Fama-French Model.  We are also influenced by the work of Robert Haugen, and are glad to acquire issues that are attractive based on the variables cited in his work.

 

We began (about 20 years ago) with a more focused value-growth approach.  Initially, we considered only issues that had consistent, predictable increases in earnings per share – those where earnings tended to increase at the same percentage rate every year (there were about 140 of them).  We asked, “What is that stream of growing earnings worth at prevailing interest rates?”  We used the formula for a partial sum of an infinite series (found in most basic calculus books).  With time and experience, our style has become somewhat more eclectic – there are other considerations such as profit margins, debt/equity ratios, return on assets, etc., - but this remains our central point of reference.  Even when we approach this from the standpoint of forthcoming turnarounds, we are still trying to acquire growth at a reasonable or attractive price. 

 

Portfolio structure is very important.  When we do select individual issues at Clark Asset Management, we view our equity selection style as that of a “Value-Growth” portfolio manager.  We will be willing to pay more for issues that have a higher growth rate, than a lower growth rate, other factors equal.  We will acquire some issues with understated or hidden asset values that we expect to have no growth at an appropriate discount to the net fair market value of those assets.

 

There is another element in our thinking.  We think investors, somewhere in the back of their minds, should have an appreciation of history, and what it means to the retention of wealth.  Wars and other events periodically occur, and governments (yours or the other guy’s) aren’t always your friends.  If you were a substantial Polish investor in 1938 with a diversified portfolio of Polish equities, you didn’t necessarily do real well over the next couple of generations.  A beginning, younger investor sometimes looks upon his investment portfolio as a way to make his fortune, while a more experienced investor may be more interested in the portfolio’s survival and persistence over the next couple of generations.  We spend some of our time thinking about some of the longer-term threats to portfolios, such as inflation, taxation, and changing secular trends.  Some of these thoughts are expressed very well in Richard Russell’s article “Rich Man, Poor Man,” posted on his website at this link:  http://ww1.dowtheoryletters.com/DTLOL.nsf/htmlmedia/body_rich_man__poor_man.html

 

Whom We Serve Well

 

Most of our clients are individuals, trusts, or smaller institutions.  Many of our clients have some familiarity with or exposure to the management of the investment process or capital projects in the petroleum or real estate industries.  Hence, they have experience with managing and acting in a way to reduce or eliminate risk and uncertainty.  They may have experience in taking on selected risks to enhance results while working to avoid risks that may detract from their results.  Several of our clients have entrepreneurial experience.  Some are widows of someone who had the above characteristics. We have no (zero) clients that used to work for the U. S. Postal Service before they retired, and few that worked for a government organization. 

 

Many of our accounts are retirement accounts.  Most of our clients are older than 40 years of age, although we now have some second- and third-generation clients of the same family.  Many are Protestant, Deist or Jewish, while Catholics are underrepresented (we’re not sure why this would be the case).  Some of our clients appreciate our technical portfolio management expertise, while others are very knowledgeable in their own right but lack the time to manage their own portfolios.  Sometimes a party or a family may want an arms’ length third party for portfolio management.     

 

We can provide management of investment portfolios for Clients in many different forms, including:

  • Joint taxable accounts
  • IRA Rollover accounts
  • Contributory IRAs
  • Roth IRAs
  • Trusts
  • Estates
  • Conservatorships
  • Educational IRAs
  • 401(k)s

 

Ask for a copy of Part II of our Form ADV, which sets out fees more specifically, or request a free informational video.  Clark Asset Management + Associates, Inc., is registered as an Investment Advisor in the states of California and Oklahoma, and operates in other states in accordance with the federal Investment Advisors Act of 1940, as amended.