Eagle Portfolio

Green Valley's opportunistic U.S. stock portfolio.¹

Overseen by Eric Linser, CFA, Chief Investment Officer, the Eagle Portfolio's disciplined investment strategy focuses on companies, over $1 billion in market capitalization, domiciled in the United States.The Eagle Portfolio complements our other offerings, the 4 Seasons &  Owl Portfolio strategies, with its uniqueness and long-term success.

If you are looking for a low-turnover portfolio with superior long term, risk-adjusted returns implemented through a disciplined process, look no further.

The Eagle Portfolio should be considered a core holding of U.S. stocks for capital appreciation.

• Overview of Eagle Portfolio on Covestor
  
• Real-Time Holdings
• Performance Results
  

This is a highly contrarian, ahead-of-the-curve anticipation approach designed to point investment analysis toward the greatest opportunities. Our technology seeks to exploit temporarily mispriced stocks before they are recognized by the Street – to the advantage of our investors.

Our approach for the US focused Eagle Portfolio is based on objective mathematical logic and not subjective emotions. The methods we employ are quantitative and contrarian. All purchases must be double qualified by two completely different but complimentary processes:

• Behavioral Finance analysis that identifies stocks where long-term value has been created by short-term events.

• Private Market Value analysis that identifies companies that are cheap in terms of the long-term cash flow generating power of the company.

We look for companies that are trading below their estimated intrinsic values, or what knowledgeable private buyers would pay for these businesses (private market value). Our unique Dual Discipline technology enhances analysis from static to dynamic – creating timely actionable ideas. Our approach results in the selection of undervalued, growing firms.

We combine cutting-edge quantitative modeling to drive the Eagle Portfolio’s process. Our clear objectives drive the portfolio’s composition and the results are impressive and consistent over time.

Our process incorporates feedback loops for analysis, improvement, and continual monitoring of the holdings.

We start with sound financial theory. We apply this to real-time judgments in actual markets to develop investment rules that transcend specific market conditions. Consistently applied, these rules pick the stocks for our Eagle Portfolio.

We combine cutting-edge quantitative modeling to drive the Eagle’s portfolio process. Our clear objectives drive the portfolio’s composition and the results are impressive and consistent over time.

Dual Process

Behavioral Finance

When companies deliver their quarterly results, investors are watching--not just for improvements, but also for how these results compare to analysts' estimates. If a company surprises the market with better-than-expected results, the stock usually jumps. On the other hand, disappointing results can cause the stock to tumble. Keenly watched and widely disseminated, quarterly announcements made by companies are key triggers for short-term stock price behavior.

We look for companies that have had, in aggregate, negative sales and earnings estimate surprises and downward revisions for the past few quarters, but which, at the most recent report, are now delivering positive results. This signals to the Street a stronger recovery potential than anticipated and with that comes more favorable analysts’ views and positive stock action. Our research looks to preempt Wall Street in their upgrades of consensus estimates.

We have found that these companies, at an inflection point, are a good place to apply longer-term valuation analysis, such as a discount cash flow model provides, since these stocks are expected to be in line for consensus upgrades rather than downgrades. Plus they are likely to be at business cycle bottoms, rather than at business cycle tops.

Private Market Value

When investing in stocks, it’s important to note that the intrinsic value of a stock is determined by its expected future cash flows, not its trailing results. When an investor buys a stock, he or she is buying ownership, or a share, in what is ultimately the future free cash flow stream of a company. And while trailing results can be used to build expectations, one must realize that past performance is no guarantee of future results.

Our goal is to identify firms that earn significantly more than their cost of capital as it is these cash flows that drive growth in shareholder value and stock price.

Our valuation model incorporates cash flow return on investment, cost of capital, and growth and life-cycle theory in the identification of stocks and in the construction of the Eagle Portfolio.

Our disciplined approach affirms that there is a fundamental theory to investment that can be quantitatively analyzed so as to avoid decision errors and behavioral biases. This discipline means:

• We won't buy overvalued stocks
• We won't fall in love with companies
• We won't override the discipline

There is only one exception to the last premise. Prior to actual purchase, our Chief Investment Officer (CIO) will review the security selected to ensure that nothing negative has occurred that is not reflected in the reported data. If there is negative information, the CIO can exclude a security from purchase, but may never add a security that has not been model selected.

Our dual process approach works. Inquire.

•  Overview of Eagle Portfolio on Covestor
  

• Independent custodian of your account -- Interactive Brokers, LLC
• Segregated account -- held in your name only, not commingled with other monies such as a mutual fund
• Diversification -- 65 portfolio companies of various sizes and industries/sectors²
  
• No leverage, no margin loans, no derivatives, no short selling risk
• Liquidity of holdings and daily pricing
• Transparency of investments in your account

Ongoing Communication

Communication is the crux of every relationship. We believe that open lines of communication result in a more complete understanding of your unique situation.

Cost & Tax Efficiency

The impact of fees and taxes is often overlooked by investors choosing a mutual fund, but they can easily turn winning funds into losers. It may be easy to ignore that impact during periods of stable and strong market returns; in a low and challenging return environment, however, eliminating unnecessary costs and risks can make a difference. In such a scenario, constructing a tax-efficient, low-cost, and risk-managed portfolio like the Eagle Portfolio becomes essential.

What Makes Us Unique

We believe it is more critical than ever for increased rigor around portfolio construction and monitoring, and providing investment strategies to help clients seize tactical opportunities.

In the past you could take a 'set it and forget it' approach, but we're in a period now where we must be more adept, and adapt to the changing environment.

We attempt to present to clients what it is we do in a straightforward way. We offer you honest analysis of your investment situation. Give us the opportunity to show you how we can do better for you.

You can begin investing with a minimum amount of $50,000 for our US focused Eagle portfolio on the Covestor platform³. Our in-house globally diversified, yet personalized, Owl and 4 Seasons Portfolio solutions start at $250,000, which are custodied at Fidelity Investments. Call us today to get started (415-568-2150).

1. Notes on risk: This Portfolio may not be suitable for all types of investors. An investment in the Portfolio (or any investment) is subject to risk, including the possible loss of principal amount invested. Other Portfolio risks include asset allocation risk, foreign securities and currency risk, emerging markets risk, small-cap, mid-cap and large-cap risk, trading risk, and turnover risk that can increase Portfolio expenses and may decrease Portfolio performance. The Portfolio is also subject to possible risks, which can result in higher volatility, associated with the underlying securities that comprise this multi-asset class approach. Brokerage costs will reduce returns (if costs are not wrapped in the overall fee structure). Past performance is no guarantee of future returns. Stocks remain risky, regardless of how long they are held, and there are long periods in which they can underperform safer investments. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index.
   
2. Diversification does not ensure a profit or protection against loss, and may not be appropriate for all investors. The Portfolio is intended for long-term investors and is not meant to be a complete investment program. Investors should consult a tax/legal advisor before making any tax-related investment decisions.
3. Eagle, Owl, and 4 Seasons Portfolios are monikers of Green Valley Wealth Advisors, LLC. Covestor Inc. is an SEC-registered investment adviser (RIA) who operates Covestor.com, an Internet website where investors can access our model Eagle portfolio. Covestor places trade instructions with Interactive Brokers, LLC (Nasdaq: IBKR), the discount broker/dealer that is responsible for the custody and clearing of all brokerage operations. On the Covestor platform Green Valley acts as a Subadvisor / 3^rd party RIA and thus Green Valley doesn't act in a fiduciary capacity. The Eagle Portfolio account minimum on Covestor is $50,000 with a minimum annual advisory fee of 1.00%. Green Valley's minimum is $250,000 where we custody and hold client assets with Fidelity Investments. Larger account sizes allow us to offer more robust asset class diversification.

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