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Stock Picking Process

Stock Picking Process. Our Objective. To reduce the universe of all possible stocks in the market to the top 25 stocks that provide a high probability of success. INVESTING UNIVERSE. First Screen. Popular Lists. Screen-Based List. Current List. Master List Top 400 Stocks.

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Stock Picking Process

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  1. Stock Picking Process

  2. Our Objective To reduce the universe of all possible stocks in the market to the top 25 stocks that provide a high probability of success.

  3. INVESTING UNIVERSE First Screen Popular Lists Screen-Based List Current List Master List Top 400 Stocks Second Screen Growth Category Value Category Quality Category Analyst Favorites Category Sentiment Category Ultimate List Top 100 Stocks Scoring Process Final List TOP PROBABILITY STOCKS

  4. INVESTING UNIVERSE First Screen Three Evaluation Lists • Popular List: • Top 50 stocks IBD • Top 100 stocks VL • Top 36 stocks SS • Top 37 stocks MS • Top 50 stocks B • Screen-Based List: • Value Screen • Growth Screen • Momentum Screen • Current List: • Current Nominees • Personal Nominees Master List TOP 400 Stocks

  5. Top 100 Stocks: Investors Business Daily • The IBD 50 is a list of 50 top-rated growth stocks in IBD’s database with top fundamentals showing strong relative price strength in the market. • Criteria to pick stocks: • EPS Rating • Relative Price Strength • Return on Equity • Management Ownership

  6. INVESTING UNIVERSE First Screen Three Evaluation Lists • Popular List: • Top 50 stocks IBD • Top 100 stocks VL • Top 36 stocks SS • Top 37 stocks MS • Top 50 stocks B • Screen-Based List: • Value Screen • Growth Screen • Momentum Screen • Current List: • Current Nominees • Personal Nominees Master List TOP 400 Stocks

  7. SCREEN-BASED LIST Investment Style: VALUE Screen Tests Investment Style: GROWTH Screen Tests Investment Style: MOMENTUM Screen Tests Stock Screener Stock Screener Stock Screener Growth Screen 1 Relative Growth Value Screen 1 Relative Value Momentum Screen 1 Relative Strength Growth Screen 2 Comparative & Financial Strength Growth Screen 3 Comparative & Sustainable Growth Momentum Screen 2 Moving Average & Behavioral Value Screen 2 Comparative Value & Growth Value Screen 3 Contrarian Opportunities Momentum Screen 3 Relative Momentum

  8. Screen-Based Tests * *The formulas have been altered to protect Proprietary Information

  9. Value Screen 2: Comparative Value P/E Ratio <= Indy. Avg. P/E Price/Sales <= Indy. Avg. P/S TTM ROE > Indy. Avg. TTM ROE TTM ROE > 0 5 y Avg. ROE > 5 Y Indy. Avg. ROE LT Debt/Equity ratio <= Indy. Avg. LT Debt Ratio Price/Book <= 3 EPS Growth Est. > Indy. Avg. EPS Growth Est. Y1 EPS Est. Growth > 0

  10. Screen Results: Value Screen 2 Securities offered through Triad Advisors, member FINRA/SIPC. Advisory services offered through Lee Johnson Capital Management, LLC (LJCM). LJCM is an independent Registered Investment Advisor and is not affiliated with Triad Advisors.

  11. First Screen INVESTING UNIVERSE 10,000 + Stocks Master List TOP 400 Stocks

  12. Second Screen Second Screen Master List Top 400 Stocks Growth Category: 1.Historical comparison 2.Industry Comparison Quality Category: 1.Industry Leaders 2.Fastest Turnover Value Category: 1.Catching Up Stocks Sentiment Category: 1.High P/E Multiples 2.Institutional Ownership Analyst Favorites Category: 1.Most Repeated Stocks

  13. Second Screen* *The formulas have been altered to protect Proprietary Information

  14. Third Screen • Ultimate List: Top 100 • Scoring Process: • Growth Score • Profitability Score • Financial Health Score • Momentum Score Stock Stars List TOP PROBABILITY STOCKS

  15. September 2012 Stock Picks As of August 31, 2012 - Subject to change.

  16. September 2012 Stock Picks

  17. September 2012 Stock Picks

  18. Our Stock Selection Discipline • Process is dynamic but we are not “traders” • Buying and selling designed to follow trends

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