Beacon’s equity selection process reflects our belief that investing in large companies that have a dominant position within a growing industry is an effective method to meet our clients’ investment objectives. We critically analyze each common stock that passes our screening process for its earnings growth prospects in relation to the valuation (price/earnings ratio) we place on expected earnings.

Our highly disciplined method of stock selection begins with the following two criteria:

1.    Companies with a market capitalization greater than $3 billion that fulfill these rigorous standards:

• The company must be domiciled in the United States.

• The stock must be listed on the New York Stock Exchange (or must be eligible and currently an applicant for listing).

• Dividends must have been paid in at least nine of the last 10 years (except financial companies).

• The ratio of current assets to current liabilities for most industrial companies must be 1.5 to 1, or their senior debt must be investment grade.

• Banks and financial companies must have capital funds of at least $100 million and must have paid a dividend in at least four of the past five years.

2.    Domestic companies with positive operating income, market capitalization in excess of $10 billion and institutional ownership of over 25 percent are exempt from the above criteria.

                    Typically, there are approximately 400 companies that pass our initial screen of the universe of publicly traded stocks. In general, 90 percent of the assets in Beacon’s portfolios meet the strict definition of the previous two sets of criteria. The remaining 10 percent, at cost, may fall just outside our screening parameters. However, all of the stocks we buy incorporate what we think is the best combination of high quality, substantial earnings growth and reasonable or fair value.