The decision-making process at Luther King Capital Management is designed to provide a timely implementation of investment ideas in client portfolios. The selection of investments must be consistent with our investment philosophy.

Each portfolio manager is responsible for monitoring client investments. In addition, each portfolio manager has analytical responsibility for a specific industry.  We also have a dedicated research staff. This staff does not have client responsibilities, and their focus is centered on research of the companies and the industries they follow. Accompanying each investment recommendation is a written analysis of the merits and risks associated with investment.  The idea is either approved or rejected by the portfolio manager group with the final decision responsibility resting with Luther King. Once approved, each stock can be used by a manager at his discretion depending upon the suitability of the investment idea for our clients.

A sell decision can result from any of the following events occurring: 1) A replacement cost/asset based investment accretes to its replacement cost.  2) The reason we purchased the issue is no longer valid.  3) An investment becomes overpriced.  This condition is very difficult to determine in the case of open ended growth stock investments.  One reasonable gauge of valuation is the relative price to earnings ratio.  If the relative multiple is well above historical norms, the stock is reviewed and may become a sell candidate.  In addition, if the investment position is outsized in the portfolio due to price appreciation, it is a candidate for partial sale.

Each manager has discretion in determining whether a specific stock should be sold in a specific portfolio.  The analyst responsible for the idea normally has influence over the group in this decision.  Under normal conditions, each portfolio contains between 30-40 stocks.  The number of stocks is dependent upon portfolio size and particular investment themes which are being implemented.

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