HomeMy WebLinkAbout1992-10-29 - Agendas - Final•
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Fire Pension
Agenda Items
For
10/29/92
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NM CAPITAL MANAGEMENT, INC. Pegs 1
CLIENT : FAYETTPP - CITY OF FAYETTEVILLE FIRE PENSION AND RELIEF FUND
110AGER: GSE
REPORTING PERIOD: 01/01/92 TO 09/30/92
PORTFOLIO COMPOSITION STATEMENT OF CHANGES
MARKET % OF PORTFOLIO MARKET VALUE AT 01/01/92: $2,524,733.00
VALUE TOTAL
DEPOSITS 0.00
CASH AND EQUIVALENTS 107,191.28 4.0 WITHDRAWALS (12,732.48)
EQUITIES 1,452,508.18 54.3 INCOME EARNED 112,141.86
GOVT/CORP BONDS 1,080,838.00 40.4 CAPITAL APPRECIATION 48,766.82
ACCRUED INCOME 32,371.74 1.2
TOTAL 2,672,909.20 100.0 PORTFOLIO MARKET VALUE AT 09/30/92:
$2,672,909.20
CUMULATIVE ANNUALIZED
01/01/92 TO 09/30/92 YEAR -TO -GATE PAST TWELVE MONTHS SINCE INCEPTION SINCE INCEPTION
TOTAL PORTFOLIO 6.4%
6.4% 11.9%
31.5% 10.5%
CASH AND EQUIVALENTS 3.4% 3.4% 4.8% 17.8% 6.1%
EQUITIES 4.8% 4.8% 10.4% 28.2% 9.5%
GOV'T/CORP BONDS 8.4% 8.4% 14.9% 39.2% 12.8%
BALANCED INDEX - I
T0IRES
Y'500 REINVESTED
T/CORP INTERMEDIATE BONG
CONSUMER PRICE INDEX
3.6%
3.1%
2.4%
7.6%
2.3%
3.6%
3.1%
2.4%
7.6%
2.3%
INVESTMENT EARNINGS (APPRECIATION + INCOME) SINCE INCEPTION 01/18/90: $644,341.22
34.5%
18.6%
35.1%
34.6%
11.8%
NM CAPITAL MANAGEMENT, INC.
DATE PRINTEO: 10/26/92 Portfolio 0 ver v i e w APPRAISAL DATE: 10/22/92
"OUNT ID: FAYETTPP PRICING DATE: 10/22/92
OUNT NAME: CITY OF FAYETTEVILLE FIRE PENSION AND RELIEF FUND
USER DEFINE CODES: NNPXD - B777FBE7
CURRENT ASSET CHANGE ACCRUED COST
VALUE MIX TARGET % TO TARGET YIELD INCOME BASIS
Cash and Equivalents 62,499 2.4% 5.0% 69,417 3.3% 0 62,499
Fixed Income 1,089,049 41.3% 40.0% -33,720 7.5% 27,974 980,137
Equities 1,486,774 56.4% 55.0% -35,697 3.1% 1,122 1,379,142
TOTAL PORTFOLIO 2.638,322 100.0%
•
•
STOCK AVERAGES
29,096 2,421,778
FIXED INCOME AVERAGES PERFORMANCE
TO 10/22/92
EXCL TOTAL
CASH 8 EOUIV SINCE RETURN
P/E -1.99 VIM 6.23% 01/18/90 29.78%
BETA 1.08 DUR 5.25 12/31/91 5.02%
ERNGR 11.83% COUP 8.25% 06/30/92 2.55%
OIVGR 11.69% MAT 6.58 09/30/92 -1.29%
MDY (N/A ) 09/30/92 -1.29%
S8P (N/A )
NM CAPITAL MANAGEMENT, INC.
DATE PRINTED: 10/26/92 Portfolio Summary PRICING DATE: 10/22/92
DATE OF APPRAISAL: 10/26/92
FAYETTPP - CITY OF FAYETTEVILLE FIRE PENSION AND RELIEF FUND
ESTIMATED
MARKET % OF ANNUAL
VALUE PORTFOLIO INCOME YIELD
Cash and Equivalents
MONEY MARKET FUNDS
Fixed Income
GOVERNMENT ISSUES
Equities
COMMON STOCKS
62,498.64
1,061,075.61
1,485,652.33
ACCRUED INTEREST 28,845.15
ACCRUED DIVIDEND 1,122.00
TOTAL PORTFOLIO
2.4 2,050 3.3
40.2 79,775 7.5
56.3 46,095 3.1
0.0
2,639,193.73 100.0
127,920 4.8
•
NM CAPITAL MANAGEMENT, INC.
DATE PRINTED: 10/26/92 Common Stock Summary PRICING DATE: 10/22/92
DATE OF APPRAISAL: 10/26/92
FAYETTPP - CITY OF FAYETTEVILLE FIRE PENSION AND RELIEF FUND
% %
MARKET COAICN TOTAL
COMMON STOCKS VALUE STOCKS PORTFOLIO
Capital Goods - Industrial
Capital Goods - Technology
Consumer Durables
Consumer Non -Durables
Energy
Finance
Basic Industry
Transportation
Utilities
TOTAL COMMON STOCK
148,312.50
258,300.00
206,300.00
197,079.63
143,137.50
.230,935.20
78,600.00
41,562.50
181,425.00
1,485,652.33
10.0
17.4
13.9
13.3
9.6
15.5
5.3
2.8
12.2
5.6
9.8
7.8
7.5
5.4
8.8
3.0
1.6
6.9
100.0 56.3
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GATE PRINTED: 10/26/92
•
SHARES /
FACE VALUE
DESCRIPTION
NM CAPITAL MANAGEMENT, INC.
Client Appraisal
FAYETTPP - CITY OF FAYETTEVILLE FIRE PENSION AND RELIEF FUND
Cash and Equivalents
MONEY MARKET FUNDS
62,498.64 MONEY MARKET FUND
220,000
100,000
100,000
300,000
250.000
Fixed Income
GOVERNMENT ISSUES
US TREAS 8.50% 5/15/97
FEDERAL NATL MTG ASSN
DEB 9.550% 9/10/97
FEDERAL NATL MTG ASSOC
DEB 9.150% 4/10/98
US TREAS 7.875% 11/15/99
US TREAS 7.5% 11/15/01
TOTAL GOVERNMENT ISSUES
Equities
COMMON STOCKS
Capital Goods - Industrial
3,200 HARNISCHFEGER INDUSTRY
1,500 TRINITY INDS INC DEL
2,200 TRINOVA CORP
UNIT
COST
TOTAL
COST
1.00 62,498.64
MARKET
PRICE
MARKET
VALUE
Page 1
PRICING DATE: 10/22/92
GATE OF APPRAISAL: 10/26/92
% OF
% OF ASSET
PORTFOLIO CLASS
ESTIMATED
ANNUAL CUR
INCOME YLU
1.00 62,498.64 2.4 100.0 2,050 3.3
100.04 220 092 35 111.16 244,543.86 9.3 23.0 18,700 7.6
99.34 99,343.75 116.00 116,000.00 4.4 10.9 9,550 8.2
99.34 99,343.75 113.94 113,938.00 4.3 10.7 9,150 8.0
102.95 308,852.10 108.19 324,562.50 12.3 30.6 23,625 7.3
101.00 252,504.85 104.81 262,031.25 9.9 24.7 18.750 7.2
16.69
26.15
18.07
TOTAL Capital Goods - Industrial
Capital Goods - Technology
4,700 ANALOG DEVICES INC.
4.200 AUGAT INC
1,300 BOEING CO
2,500 ROCKWELL INTL CORP
1,000 UNITED TECHNOLOGIES CORP
2,300
1,900
2,000
1,200
2,449
2,500
1.100
2,400
8.10
12.17
46.09
23.28
46.94
TOTAL Capital Goods - Technology
Consumer Durables
ARVIN INOS INC
BROWN GROUP INC
TANDY CORP
WHIRLPOOL CORP
TOTAL Consumer Durables
Consumer Non -Durables
ARCHER DANIELS MIDLAND
HANSON PLC SPONSRD
MCOONALDS CORP
RYKOFF-SEXTON INC
TOTAL Consumer Non -Durables
22.07
26.43
26.85
33.19
19.83
19.44
31.54
19.20
980,136.80
53,412.85
39,222.15
39,743.45
132,378.45
38,074.85
51,123.55
59,919.55
58,189.85
46,935.90
254,243.70
50,754.35
50,225.86
53,698.90
39,832.85
194,511.96
48,554.57
48,604.85
34,692.38
46,079.35
17.25
32.38
20.25
11.63
10.88
37.25
25.63
45.50
25.38
26.13
26.88
37.13
26.63
19.13
42.88
15.38
1,061,075.61 40.2 100.0 79,775 7.5
55,200.00
48,562.50
44,550.00
2.1
1.8
1.7
3.7
3.3
3.0
1,280 2.3
1,200 2.5
1,496 3.4
148,312.50 5.6 10.0 3,976 2.7
54,637.50
45,675.00
48,425.00
64,062.50
45,500.00
2.1
1.7
1.8
2.4
1.7
3.7
3.1
3.3
4.3
3.1
0 0.0
0 0.0
1,300 2.7
2,300 3.6
1,800 4.0
258,300.00 9.8 17.4 5,400 2.1
58,362.50
49,637.50
53,750.00
44,550.00
2.2 3.9
1.9 3.3
2.0 3.6
1.7 3.0
1,564
3,040
1,200
1,320
2.7
6.1
2.2
3.0
206,300.00 7.8 13.9 7,124 3.5
65,204.63
47,812.50
47,162.50
36,900.00
2.5 4.4
1.8 3.2
1.8 3.2
1.4 2.5
233
2,350
440
1,440
0.4
4.9
0.9
3.9
177,931.15 197,079.63 7.5 13.3 4,463 2.3
DATE PRINTED: 10/26/92
•
SHARES /
FACE VALUE
DESCRIPTION
NM CAPITAL MANAGEMENT, INC. Page 2
Client Appraisal
FAYETTPP - CITY OF FAYETTEVILLE FIRE PENSION AND RELIEF FUND
UNIT
COST
Energy
1,900 NORSK HYDRO A S SPONSORED ADR 23.70
700 ROYAL DUTCH PETE NY REG GLDR 5 75.16
1,200 SOC. NATL. ELF ACOUITAINE SPONS. 28.36
80
1,000
1,000
400
700
2,200
3,000
TOTAL Energy
Finance
DEUTSCHE BANK A G ADR
FEDERAL NATL MTG ASSN
FIRST OF AMER BK CORP
LOEMS CORP
ST PAUL COS INC
TOTAL Finance
Basic Industry
JAMES RIVER CORP VA
LAFARGE CORP
TOTAL Basic Industry
Transportation
• 3,500 AAR CORP
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1,000
1,600
800
2,500
Uti Lities
HOUSTON INDS INC
LONG ISLAND LTG CO
NICOR INC
SPRINT CORP
TOTAL Utilities
TOTAL COMMON STOCKS
ACCRUED INTEREST
ACCRUED DIVIDEND
TOTAL PORTFOLIO
482.59
34.10
24.57
106.76
73.47
TOTAL MARKET
COST PRICE
45,022.55
52,613.55
34,035.44
131,671.54
38,607.20
34,104.70
24,569.85
42,702.05
51,426.85
191,410.65
22.25
85.38
34.25
445.44
67.50
32.88
111.75
71.75
PRICING DATE: 10/22/92
DATE OF APPRAISAL: 10/26/92
MARKET % OF
VALUE PORTFOLIO
42,275.00 1.6
59,762.50 2.3
41,100.00 1.6
% OF
ASSET
CLASS
ESTIMATED
ANNUAL CUR
INCOME YLD
2.8 901 2.1
4.0 3,409 5.7
2.8 1,148 2.8
143,137.50 5.4 9.6 5,458 3.8
35,635.20 1.4
67,500.00 2.6
32,875.00 1.2
44,700.00 1.7
50,225.00 1.9
2.4
4.5
2.2
3.0
3.4
538 1.5
1,360 2.0
1,400 4.3
400 0.9
1,904 3.8
230,935.20 8.8 15.5 5,602 2.4
21.64 47,601.85 18.00 39,600.00 1.5
13.96 41,868.55 13.00 39,000.00 1.5
89,470.40
2.7 1,320 3.3
2.6 900 2.3
78,600.00 3.0 5.3 2,220 2.8
13.36 46,769.70 11.88 41,562.50 1.6 2.8 1,680 4.0
34.24
23.67
41.14
22.29
34,244.60 43.25
37,871.55 24.13
32,913.55 47.13
55,724.85 24.75
160,754.55
1,379,142.10
43,250.00
38,600.00
37,700.00
61,875.00
1.6
1.5
1.4
2.3
2.9
2.6
2.5
4.2
3,000
2,784
1,888
2,500
6.9
7.2
5.0
4.0
181,425.00 6.9 12.2 10,172 5.6
1,485,652.33 56.3 100.0 46,095 3.1
28,845.15 1.1
1,122.00 0.0
2,421,777.54 2,639,193.73 100.0 100.0 127,920 4.8
•
NM CAPITAL MANAGEMENT, INC. Page 1
CLIENT : FAYETTPP - CITY OF FAYETTEVILLE FIRE PENSION AND RELIEF FUND
illirAGER: GSE
REPORTING PERIOD: 01/01/92 TO 09/30/92
PORTFOLIO COMPOSITION STATEMENT OF CHANGES
MARKET X OF PORTFOLIO MARKET VALUE AT 01/01/92: $2,524,733.00
VALUE TOTAL
DEPOSITS 0.00
CASH AND EQUIVALENTS 107,191.28 4.0 WITHDRAWALS (12,732.48)
EQUITIES 1,452,508.18 54.3 INCOME EARNED 112,141.86
GOV'T/CORP BONDS 1,080,838.00 40.4 CAPITAL APPRECIATION 48,766.82
ACCRUED INCOME 32,371.74 1.2
TOTAL 2,672,909.20 100.0 PORTFOLIO MARKET VALUE AT 09/30/92:
$2,672,909.20
CUMULATIVE ANNUALIZED
01/01/92 TO 09/30/92 YEAR-TO-DATE PAST TWELVE MONTHS SINCE INCEPTION SINCE INCEPTION
TOTAL PORTFOLIO 6.4%
CASH AND EQUIVALENTS
EQUITIES
GOVT/CORP BONDS
BALANCED INDEX - I
AgiS T BILLS
500 REINVESTED
IlliV'T/CORP INTERMEDIATE BOND
CONSUMER PRICE INDEX
3.4%
4.8%
8.4%
3.6%
3.1%
2.4%
7.6%
2.3%
6.4% 11.9%
3.4%
4.8%
8.4%
3.6%
3.1%
2.4%
7.6%
2.3%
4.8%
10.4%
14.9%
INVESTMENT EARNINGS (APPRECIATION + INCOME) SINCE INCEPTION 01/18/90: $644,341.22
•
31.5% 10.5%
17.8%
28.2%
39.2%
34.5%
18.6%
35.1%
34.6%
11.8%
6.1%
9.5%
12.8%
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NM CAPITAL MANAGEMENT, INC.
DATE PRINTED: 10/26/92 Portfolio Overview APPRAISAL DATE: 10/22/92
COUNT ID: FAYETTPP PRICING DATE: 10/22/92
UNT NAME: CITY OF FAYETTEVILLE FIRE PENSION AND RELIEF FUND
SER DEFINE CODES: NNPXD - BTTTFBEI
Cash and Equivalents
Fixed Income
Equities
CURRENT ASSET CHANGE ACCRUED COST
VALUE MIX TARGET X TO TARGET YIELD INCOME BASIS
62,499
1,089,049
1,486,774
2.4%
41.3%
56.4%
TOTAL PORTFOLIO 2,638,322 100.0%
STOCK AVERAGES
5.0%
40.0%
55.0%
69,417
-33,720
-35,697
3.3%
7.5%
3.1%
0
27,974
1,122
62,499
980,137
1,379,142
29,096 2,421,778
FIXED INCOME AVERAGES PERFORMANCE
TO 10/22/92
EXCL TOTAL
CASH 8 EQUIV SINCE RETURN
P/E -1.99 YTM 6.23% 01/18/90 29.78%
BETA 1.08 DUR 5.25 12/31/91 5.02%
ERNGR 11.83% COUP 8.25% 06/30/92 2.55%
DIYGR 11.69% MAT 6.58 09/30/92 -1.29%
MDY (N/A ) 09/30/92 -1.29%
SBP (N/A )
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•
NM CAPITAL MANAGEMENT, INC.
DATE PRINTED: 10/26/92 Portfolio S u m m a r y PRICING DATE: 10/22/92
DATE OF APPRAISAL: 10/26/92
FAYETTPP - CITY OF FAYETTEVILLE FIRE PENSION AND RELIEF FUND
ESTIMATED
MARKET X OF ANNUAL
VALUE PORTFOLIO INCOME YIELD
Cash and Equivalents
MONEY MARKET FUNDS
Fixed Income
GOVERNMENT ISSUES
Equities
COMMON STOCKS
62,498.64 2.4 2,050 3.3
1,061,075.61 40.2 79,775 7.5
1,485,652.33 56.3 46,095 3.1
ACCRUED INTEREST 28,845.15
ACCRUED DIVIDEND 1,122.00
TOTAL PORTFOLIO
1.1
0.0
2,639,193.73 100.0
127,920 4.8
•
NM CAPITAL MANAGEMENT, INC.
DATE PRINTED: 10/26/92 Common Stock Summary PRICING DATE: 10/22/92
DATE OF APPRAISAL: 10/26/92
FAYETTPP - CITY OF FAYETTEVILLE FIRE PENSION AND RELIEF FUND
% OF % OF
MARKET COMMON TOTAL
COMMON STOCKS VALUE STOCKS PORTFOLIO
Capital Goods - Industrial
Capital Goads - Technology
Consumer Durables
Consumer Non -Durables
Energy
Finance
Basic Industry
Transportation
Utilities
TOTAL COMMON STOCK
148,312.50
258,300.00
206,300.00
197,079.63
143,137.50
230,935.20
78,600.00
41,562.50
181,425.00
1,485,652.33
10.0
17.4
13.9
13.3
9.6
15.5
5.3
2.8
12.2
5.6
9.8
7.8
7.5
5.4
8.8
3.0
1.6
6.9
100.0 56.3
GATE PRINTED: 10/26/92
•
SHARES /
FACE VALUE
DESCRIPTION
NM CAPITAL MANAGEMENT, INC. Page 1
Client Appraisal
FAYETTPP - CITY OF FAYETTEYILLE FIRE PENSION AND RELIEF FUND
Cash and Equivalents
MONEY MARKET FUNDS
62,498.64 MONEY MARKET FUND
220,000
100,000
100,000
300,000
250,000
Fixed Income
GOVERNMENT ISSUES
US TREAS 8.50% 5/15/97
FEDERAL NAIL MTG ASSN
DEB 9.550% 9/10/97
FEDERAL NAIL MTG ASSOC
DEB 9.150% 4/10/98
US TREAS 7.875% 11/15/99
US TREAS 7.5% 11/15/01
TOTAL GOVERNMENT ISSUES
UNIT
COST
TOTAL
COST
MARKET
PRICE
1.00 62,498.64 1.00
100.04
99.34
99.34
102.95
101.00
Equities
COMMON STOCKS
Capital Goods - Industrial
3,200 HARNISCHFEGER INDUSTRY 16.69
1,500 TRINITY INDS INC DEL 26.15
2,200 TRINOVA CORP 18.07
TOTAL Capital Goods - Industrial
Capital Goods - Technology
4,700 ANALOG DEVICES INC.
4,200 AUGAT INC
1.300 BOEING CO
2,500 ROCKWELL INTL CORP
1,000 UNITED TECHNOLOGIES CORP
2,300
1,900
2,000
1.200
2,449
2,500
1,100
2,400
8.10
12.17
46.09
23.28
46.94
TOTAL Capital Goods - Technology
Consumer Durables
ARVIN INDS INC
BROWN GROUP INC
TANDY CORP
WHIRLPOOL CORP
TOTAL Consumer Durables
Consumer Non -Durables
ARCHER DANIELS MIDLAND
HANSON PLC SPONSRD
MCDONALDS CORP
RYKOFF-SEXTON INC
TOTAL Consumer Non -Durables
22.07
26.43
26.85
33.19
19.83
19.44
31.54
19.20
220,092.35 111.16
99,343.75 116.00
99,343.75 113.94
306,852.10 108.19
252,504.85 104.81
980,136.80
53,412.85
39,222.15
39,743.45
132,378.45
38,074.85
51,123.55
59,919.55
58,189.85
46,935.90
254,243.70
50,754.35
50,225.86
53,698.90
39,832.85
194,511.96
48,554.57
48,604.85
34,692.38
46,079.35
177,931.15
17.25
32.38
20.25
11.63
10.88
37.25
25.63
45.50
25.38
26.13
26.88
37.13
26.63
19.13
42.88
15.38
PRICING DATE: 10/22/92
DATE OF APPRAISAL: 10/26/92
X OF
MARKET % OF ASSET
VALUE PORTFOLIO CLASS
62,498.64
244,543.86
116,000.00
113,938.00
ESTIMATED
ANNUAL CUR
INCOME YLD
2.4 100.0 2.050 3.3
9.3 23.0 18,700 7.6
4.4 10.9 9,550 8.2
4.3 10.7 9,150 8.0
324,562.50 12.3 30.6 23,625 7.3
262,031.25 9.9 24.7 18,750 7.2
1,061,075.61 40.2 100.0 79,775 7.5
55,200.00
48,562.50
44,550 00
148,312.50
54,631 50
45,675.00
48,425.00
64,062.50
45,500.00
258,300.00
58,362.50
49,637.50
53,750.00
44,550 00
206,300.00
65,204.63
47,812.50
47,162.50
36,900.00
197,079.63
2.1
1.8
1.7
3.7
3.3
3.0
1,280 2.3
1,200 2.5
1,496 3.4
5.6 10.0 3,976 2.7
2.1
1.7
1.8
2.4
1.7
3.7
3.1
3.3
4.3
3.1
0
0
1,300
2,300
1,800
0.0
0.0
2.7
3.6
4.0
9.8 17.4 5,400 2.1
2.2
1.9
2.0
1.7
3.9
3.3
3.6
3.0
1,564
3,040
1,200
1,320
2.7
6.1
2.2
3.0
7.8 13.9 7,124 3.5
2.5
1.8
1.8
1.4
4.4
3.2
3.2
2.5
233
2,350
440
1,440
0.4
4.9
0.9
3.9
7.5 13.3 4,463 2.3
•
•
DATE PRINTED: 10/26/92
•
SHARES /
FACE VALUE
DESCRIPTION
NM CAPITAL MANAGEMENT, INC. Page 2
Client Appraisal
FAYETTPP - CITY OF FAYETTEVILLE FIRE PENSION AND RELIEF FUND
Energy
1,900 NORSK HYDRO A S SPONSORED AOR
700 ROYAL DUTCH PETE NY REG GLDR 5
1,200 SOC. NATL. ELF ACOUITAINE SPONS.
80
1,000
1,000
400
700
2,200
3,000
TOTAL Energy
Finance
DEUTSCHE BANK A G ADR
FEDERAL NATL MTG ASSN
FIRST OF AMER BK CORP
LOEWS CORP
ST PAUL COS INC
TOTAL Finance
Basic Industry
JAMES RIVER CORP VA
LAFARGE CORP
TOTAL Basic Industry
Transportation
• 3,500 AAR CORP
•
1,000
1,600
800
2,500
Utilities
HOUSTON INDS INC
LONG ISLAND LTG CO
NICOR INC
SPRINT CORP
TOTAL Utilities
TOTAL GONION STOCKS
ACCRUED INTEREST
ACCRUED DIVIDEND
TOTAL PORTFOLIO
UNIT
COST
23.70
75.16
28.36
TOTAL MARKET
COST PRICE
45,022.55 22.25
52,613.55 85.38
34,035.44 34.25
131,671.54
PRICING DATE: 10/22/92
DATE OF APPRAISAL: 10/26/92
% OF
MARKET % OF ASSET
VALUE PORTFOLIO CLASS
42,275.00
59,762.50
41,100.00
ESTIMATED
ANNUAL CUR
INCOME YLD
1.6 2.8 901 2.1
2.3 4.0 3,409 5.7
1.6 2.8 1,148 2.8
143,137.50 5.4 9.6 5,458 3.8
482.59 38,607.20 445.44 35,635.20 1.4 2.4 538 1.5
34.10 34,104.70 67.50 67,500.00 2.6 4.5 1,360 2.0
24.57 24,569.85 32.88 32,875.00 1.2 2.2 1,400 4.3
106.76 42,702.05 111.75 44,700.00 1.7 3.0 400 0.9
73.47 51,426.85 71.75 50,225.00 1.9 3.4 1,904 3.8
21.64
13.96
13.36
34.24
23.67
41.14
22.29
191,410.65
47,601.85 18.00
41,868.55 13.00
89,470.40
46,769.70 11.88
34,244.60
37,871.55
32,913.55
55,724.85
160,754.55
1,379,142.10
43.25
24.13
47.13
24.75
230,935.20 8.8 15.5 5,602 2.4
39,600.00 1.5 2.7 1,320 3.3
39,000.00 1.5 2.6 900 2.3
78,600.00 3.0 5.3 2,220 2.8
41,562.50 1.6 2.8 1,680 4.0
43,250.00
38,600.00
37,700.00
61,875.00
1.6
1.5
1.4
2.3
2.9
2.6
2.5
4.2
3,000
2,784
1,888
2,500
6.9
7.2
5.0
4.0
181,425.00 6.9 12.2 10,172 5.6
1,485,652.33 56.3 100.0 46,095 3.1
28,845.15 1.1
1,122.00 0.0
2,421,777.54 2,639,193.73 100.0 100.0 127,920 4.8
10-29-1992 11:28
FAYETTEVILLE FIRE DEPT PENSION AND RELIEF FUND
PORTFOLIO PERFORMANCE 12/31/91 TO 09/30/92
NM CAPITAL MANAGEMENT
ROXBURY
INCOME ACCT
withdrawals
deposit 7/31/92
3 - MONTHS TREASURY BILLS
DJ1A W/DIV REINVESTED
S 8 P 500 W/DIV REINVEST
LONG TERM TREASURY BONDS
H IGH GRADE CORP BONDS
CPI (AUG)
NM CAPITAL
ROXBURY
INCOME ACCT (time wtd)
deposits( 1001000
withdrawals: 84,000
12/31/91
*2,523,916
796,707
$2,821,624
- 84,000
+-_14QL000
2,837,624
12/31/91
+ 6.38
+24.31
+30.48
+ 18.43
+19.65
+ 3.21
+ 19.73
+40.73
+ 12.70
INVESTMENT: INCOME PORTFOLIO
12/06/85
04/23/87
(NM)
09/30/92
*2,672,909
761,157
3,002,411
9/30/92
+3.13
+ 5.58
+ 2.46
+ 6.75
+ 8.33
+ 2.18
+ 6.40
- 4.46
+ 5.97
* 1,000,000.00
647, 585. 00
* 1,647,585.00
EQUITY PORTFOLIO (ROXBURY)
06/20/86
10/01/86
W ITHDRAWALS:
JANUARY. . . .*27,000
FEBRUARY . . ▪ 17,000
MARCH 20,000
APRIL 15,000
MAY 51000
JUNE 0
• 312,657.00
195,000.00
507,657.00
JULY
AUGUST. . .
SEPTEMBER
OCTOBER . .
NOVEMBER.
DECEMBER
•
•
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P.02/02
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FAYETTPP
QUARTERLY REPORT
CITY OF FAYETTEVILLE FIRE
PENSION AND RELIEF FUND
September 30, 1992
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NM Capital Management, Inc.
Quarterly Investment Comment
Third Quarter 1992
THIRD QUARTER 1992 REVIEW
Since mid-January '92, the S&P 500 has
traded in a relatively narrow range --
between 400 and 420. For the quarter, the
stock index returned 3.2%, including
dividends, and only 2.4% year-to-date.
Considering the disappointing economy,
election uncertainty, and the 30% gain in the
stock index last year, this year's results are
not surprising.
Bond returns were about equal to the stock
returns for the quarter. Government
Corporate bond indices retumed 3.0-3.5% for
the three months. For the nine months,
bond returns were 6% -- about twice as
much as for stocks.
Although stock market returns have been
meager in 1992, the common stock
performance of NMCM clients has been
better than most -- generally close to the
broad market index for the third quarter
and outperforming the index year-to-date.
Our intermediate maturity bond strategy has
also performed well for the quarter and year.
Balanced portfolios have performed the
best, reflecting the stronger performance
of bonds compared to stocks in 1992.
ECONOMY AND INVESTMENT
OUTLOOK
The sharp decline in short term interest rates
in early July, signalled by the Federal
Reserve lowering the discount rate to 3%,
has not resulted in a noticeable improvement
in the economy. In our opinion, recovery is
not dead but it is anemic and below general
expectations, as recent economic indicators
continue mixed.
Currently, we sense that investor
perceptions are much too pessimistic
about economic prospects. Many
economists have pointed to high consumer,
corporate and government debt as major
impediments to a faster economic recovery.
The significant decline in interest rates over
the last two years plus major debt reduction
has reduced this burden. Regulatory
pressure on banks has also been blamed for
slow economic growth. After several years
of bolstering capital and improving the
quality of loan portfolios, many banks will
return to the lending business. The next up
cycle, however, may not require the degree
of bank financing as in the past. Modern
inventory management, alternative non-bank
sources of funds (including the equity
market) and a more savings -conscious
population may reduce the need for bank
credit. If borrowers continue to be more
mindful of their credit exposure, the current
recovery cycle will likely last longer and be
less volatile and inflationary than in the past.
Such an environment would be quite
favorable for the stock and bond markets.
The international currency markets have
received recent publicity regarding their
effect on the stock and bond markets.
Investors now seem to perceive that
additional efforts by the Fed to lower
interest rates may be inhibited by the
negative effect on the dollar in foreign
exchange markets. The argument goes that
if the Fed is restrained from a further
lowering of interest rates, then the sluggish
economy may continue. The leading culprit
in this analysis is high German interest rates
which compete with relatively low U.S.
rates. We believe, in time, Germany will
lower its interest rates and this will
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encourage economic recovery in Europe and
will also aid U.S. economic growth. In the
meantime, if U.S. growth remains sluggish,
the Fed will most likely further reduce
short-term U.S. interest rates to get the
economy moving despite potential dollar
weakness.
We are a few weeks away from the
Presidential elections. Uncertainty abounds
as Clinton now appears to be the front-
runner, Perot has re-entered as the spoiler,
and Bush seems overwhelmed with blame
for the stagnant economy. The adage that
the "people vote their pocketbooks" does not
bode well for Bush's re-election But in the
Presidential election, 30 days is a long time
and no one appears to be a shoe -in.
In our view, no matter who wins the
election, the present economy is in the
process of correcting itself. Individuals and
corporations are reliquifying, moderating
consumption in favor of savings.
Speculative excesses are minimal. U.S.
corporations in recent years have become
more focused and have restructured to
increase profitability in a world of major
market expansion (Russia, China, Eastem
Europe). The North American Free Trade
Agreement is an example of economic
integration which will also enhance long-
term growth.
EQUITY STRATEGY
A review of the diversification in our
equity portfolios indicates our emphasis
on stocks we broadly classify as Capital
Goods. The slow growth and recession
environment of the last four years has tended
to keep these cyclical manufacturing stocks
generally out of favor. One development
that may help capital goods producers is the
trend toward a low cost of capital. Lower
interest rates and the improved
environment for equity financing should
influence corporations to spend more
money modernizing plants and equipment.
Many companies wanting to participate in
the expanding competitive world markets
need to increase their manufacturing
capabilities. The eamings growth of the
machinery and technology suppliers is
expected to improve substantially over the
next few years.
Equity Focus Comment
In 1902, three members of the DuPont
family completed one of the more rewarding
investment transactions in history when they
acquired control of the assets of the already
formidable DuPont Corporation for $12
million. This really was an admirable
accomplishment in that the stated assets of
the company at that time were valued at $24
million. The "values" weren't hidden. No
special knowledge beyond access to the
accounting records was required. The
selling family members and their advisors
had simply failed to "look" at the accounting
ledgers prior to closing the deal. As
unbelievable as this 1902 investment coup
was, it is even more unbelievable that in
1992, similar investment opportunities
persist for precisely the same reason --
failure to "look".
One overlooked value in today's equity
market appears to be the common shares
of Rockwell International (ROK - which
we began purchasing in June). Dismissed by
the consensus as a defense based
conglomerate, Wall Street pundits rationalize
that the current 40% discount to the S&P
500 on current earnings and the 30%
discount on book value are justified, and
they remain "neutral" on the shares. A
closer "look" might lead one to a
substantially different conclusion.
One of Rockwell's operating segments,
"Electronics", harbors the operating assets of
the Allen-Bradley Company. Advances in
the integration of telecommunications,
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software, and digital computation are
increasingly demanding comparable advances
on the factory floor. In order to remain
competitive, manufacturers must increasingly
integrate three contradictory aspects of the
manufacturing process into a seamless flow
-- speed, flexibility, and unprecedented
levels of accuracy. Each are individually
difficult to achieve; simultaneous, sustained
achievement would be virtually impossible
without advanced electronic controls.
Today, Allen-Bradley produces the requisite
electronic controllers in a Milwaukee plant
which itself serves as a world class
prototype for the highest standards of
applied flexible manufacturing technology.
The plant can turn out over a hundred
different designs in lot sizes as small as one,
while reducing total manufacturing time
from weeks to hours. Consequently, Allen-
Bradley has regained over 40% of the
U.S. controller market, previously ceded
to the Germans. Management is confident
in achieving their goal of doubling their
share of world markets over the next four to
five years. As a stand-alone company,
Allen-Bradley would probably be valued at
a market multiple or more. Hidden within
Rockwell, the company's earnings are
accorded a 50% discount to the average
market multiple.
Over the next few years the hidden potential
of Allen-Bradley, augmented by the cyclical
earnings leverage inherent in Rockwell's
Automotive/Heavy Truck division and the
technological potential in the
Telecommunications segment, is likely to
become increasingly obvious at ROK's
bottom line. Increased earnings power
(conservatively estimated at between
$3.50-$4.00) accorded a blended
conglomerate discount to the averages,
should reward today's investor with well -
above -average annualized returns over a
two to four year holding period. An
attractive dividend yield (currently around
3.5%) and the return enhancing benefit of an
ongoing corporate share repurchase program
add to the investment attraction of the
shares.
While perhaps not as dramatic or
immediately obvious as the DuPont coup, we
at NMCM believe that today's equity
markets still provide equally rewarding
investment opportunities. We will
continue to strive to be among those astute
and persistent "value" onented investors who
are willing and able to "look" for, recognize,
and capitalize on such opportunities for the
benefit of our clients' portfolios.
FIRED INCOME STRATEGY
Our Second Quarter Comment pointed out the
low level of short term interest rates (the
lowest since the early 1960s) and the
historically wide yield spread between 2 -year
and 30 -year Treasuries. These conditions
persist. In fact, at September 30, 6 -month
Treasury Bills yielded Less than 3%, and
30 -year bonds yielded 7.38%, which is an
even wider spread than three months ago.
We continue to believe the steep yield curve
is temporary and that short rates are likely to
rise as the economy strengthens. Long-term
rates, on the other hand, could ease somewhat
further as inflation expectations moderate.
The intermediate sector of the Treasury
market (7 to 10 -year maturities), which has
been our focus in fixed income portfolios,
continues to perform well. The 7 -year
Treasury note has declined from a yield of
7.2% a year ago to 5.9%, while long-term
Treasury yields declined over the past year
from 7.8% to 7.4%. The dramatic decline
in intermediate bond rates compared to
long bond rates has favorably influenced
our bond returns in each of the last four
quarters. After two years of declining
interest rates, we are cautious with regard
to the 1993 outlook. We believe the
risk/reward trade-offs still favor
intermediate bonds.
1
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NM CAPITAL MANAGEMENT, INC. Paye 1
' CLIENT : FAYETTPP CITY OF FAYETTEVILLE FIRE PENSION AND RELIEF FUND REPORTING PERIOD: 07/01/92 TO 09/30/92
MANAGER: GSE
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kTEMENT OF CHANGES
T 07/01/92: $2,577,770.07
0.00
ci cn p a p o (5,222.26)
O 1 :-.:i- O '0' 2& R p 35,387.59
0 Y• 7 O 5-' ,9 nO E CV IATION 64,973.80
P n -- O W Q N ch R E
^ 0 a W Q Q,to z p Q 6 . T 09/30/92: $2,672,909.20
R c Cn*Q ^.ri�o C o
y 3 r, O 2 O b O O ri- R. O
;C Q 11 4 O a Q, Q ,7 6' V CUMULATIVE ANNUALIZED
C.0Q C1ir z, g (03 cn
p SINCE INCEPTION SINCE INCEPTION
0 IIn O �. (n Q. R. Q. O -t 31.5% 10.5%
G SI
't 4,23 „J N P i
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•
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NM CAPITAL MANAGEMENT, INC.
DATE PRINTED: 10/19/92 Portfolio Summary PRICING DATE: 09/30/92
DATE OF APPRAISAL: 09/30/92
FAYETTPP - CITY OF FAYETTEVILLE FIRE PENSION AND RELIEF FUND
ESTIMATED
MARKET % OF ANNUAL
VALUE PORTFOLIO INCOME YIELD
Cash and Equivalents
MONEY MARKET FUNDS
Fixed Income
GOVERNMENT ISSUES
Equities
COMMON STOCKS
ACCRUED INTEREST
ACCRUED DIVIDEND
TOTAL PORTFOLIO
107,191.28
1,080,838.00
1,452,508.18
27,754.53
4,617.21
4.0 3,516 3.3
40.4 79,775 7.4
54.3 44,815 3.1
1.0
0.2
2,672,909.20 100.0
128,106 4.8
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NM CAPITAL MANAGEMENT, INC.
DATE PRINTED: 10/19/92 Common Stock Summary PRICING DATE: 09/30/92
DATE OF APPRAISAL: 09/30/92
FAYETTPP - CITY OF FAYETTEVILLE FIRE PENSION AND RELIEF FUND
XOF %
MARKET COMMON TOTAL
COMMON STOCKS VALUE STOCKS PORTFOLIO
Capital Goods - Industrial
Capital Goods - Technology
Consumer Durables
Consumer Non -Durables
Energy
Finance
Basic Industry
Transportation
Utilities
TOTAL COMMON STOCK
98,525.00
255,487.50
209,125.00
200,193.88
152,837.50
236,951.80
76,250.00
41,125.00
182,012.50
1,452,508.18
6.8
17.8
14.4
13.8
10.5
16.3
5.2
2.8
12.5
3.7
9.6
7.8
7.5
5.7
8.9
2.9
1.5
6.8
100.0 54.3
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' DATE PRINTED:
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FACE VALUE
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107,191.28
220,000
100,000
100,000
300,000
250,000
10/19/92
DESCRIPTION
NM CAPITAL MANAGEMENT, INC. Page 1
Client Appraisal
FAYETTPP - CITY OF FAYETTEVILLE FIRE PENSION AND
Cash and Equivalents
MONEY MARKET FUNDS
MONEY MARKET FUND
Fixed Income
GOVERNMENT ISSUES
US TREAS 8.50% 5/15/97
FEDERAL NATL MTG ASSN
DEB 9.550% 9/10/97
FEDERAL NAIL MTG ASSOC
DEB 9.150% 4/10/98
US TREAS 7.875% 11/15/99
US TREAS 7.5% 11/15/01
TOTAL GOVERNMENT ISSUES
Equities
COMMON STOCKS
Capital Goods - Industrial
1,500 TRINITY INDS INC DEL
2,200 TRINOVA CORP
UNIT
COST
TOTAL MARKET
COST PRICE
PRICING DATE: 09/30/92
DATE OF APPRAISAL: 09/30/92
RELIEF FUND
MARKET % OF
VALUE PORTFOLIO
1.00 107,191.28 1.00 107,191.28
100.04
99.34
99.34
220,092.35 113.25
99,343.75 116.94
99,343.75 114.75
249,150.00
116,938.00
114,750.00
% OF
ASSET
CLASS
ESTIMATED
ANNUAL CUR
INCOME YLD
4.0 100.0 3,516 3.3
9.3 23.1 18,700 7.5
4.4 10.8 9,550 8.2
4.3 10.6 9,150 8.0
102.95 308,852.10 110.63 331,875.00 12.4 30.7 23,625 7.1
101.00 252,504.85 107.25 268,125.00 10.0 24.8 18,750 7.0
980,136.80
1,080,838.00 40.4 100.0 79,775 7.4
26.15 39,222.15 32.50 48,750.00
18.07 39,743.45 22.63 49,775.00
TOTAL Capital Goods - Industrial
Capital Goods - Technology
4,700 ANALOG DEVICES INC.
4,200 AUGAT INC
1,300 BOEING CO
2,500 ROCKWELL INTL CORP
1.000 UNITED TECHNOLOGIES CORP
2,300
1,900
2,000
1,200
8.10
12.17
46.09
23.28
46.94
TOTAL Capital Goods - Technology
Consumer Durables
ARVIN INDS INC
BROWN GROUP INC
TANDY CORP
WHIRLPOOL CORP
TOTAL Consumer Durables
Consumer Non -Durables
2,449 ARCHER DANIELS MIDLAND
2,500 HANSON PLC SPONSRO
1,100 MCDONALDS CORP
2,400 RYKOFF-SEXTON INC
TOTAL Consumer Non -Durables
22.07
26.43
26.85
33.19
19.83
19.44
31.54
19.20
78,965.60
38,074.85
51,123.55
59,919.55
58,189.85
46,935.90
254,243.70
50,754.35
50,225.86
53,698.90
39,832.85
194,511.96
48,554.57
48,604.85
34,692.38
46,079.35
177,931.15
10.38
11.00
36.75
25.50
49.00
26.13
26.13
27.13
37.63
24.88
19.63
44.38
17.25
98,525.00
48,762.50
46,200.00
47,775.00
63,750.00
49,000.00
255,487.50
60,087.50
49,637.50
54,250.00
45,150.00
209,125.00
60,918.88
49,062.50
48,812.50
41,400.00
200,193.88
1.8 3.4 1,200 2.5
1.9 3.4 1,496 3.0
3.7 6.8 2,696 2.7
1.8
1.7
1.8
2.4
1.8
3.4
3.2
3.3
4.4
3.4
0
0
1,300
2,300
1,800
0.0
0.0
2.7
3.6
3.7
9.6 17.6 5,400 2.1
2.2
1.9
2.0
1.7
4.1
3.4
3.7
3.1
1,564 2.6
3,040 6.1
1,200 2.2
1,320 2.9
7.8 14.4 7,124 3.4
2.3
1.8
1.8
1.5
4.2
3.4
3.4
2.9
233 0.4
2,350 4.8
440 0.9
1,440 3.5
7.5 13.8 4,463 2.2
' DATE PRINTED:
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10/19/92
DESCRIPTION
NM CAPITAL MANAGEMENT, INC. Page 2
Client Appraisal
FAYETTPP - CITY OF FAYETTEVILLE FIRE PENSION AND
Energy
1,900 NORSK HYDRO A S SPONSORED AOR
700 ROYAL DUTCH PETE NY REG GLDR 5
1,200 SOC. NATL. ELF ACGUITAINE SPONS.
80
1,000
1,000
400
700
2,200
3,000
TOTAL Energy
Finance
DEUTSCHE BANK A 0 ADR
FEDERAL NATL MTG ASSN
FIRST OF AMER 8K CORP
LOEWS CORP
ST PAUL COS INC
TOTAL Finance
Basic Industry
JAMES RIVER CORP VA
LAFARGE CORP
TOTAL Basic Industry
Transportation
3,500 AAR CORP
1,000
1,600
800
2,500
Utilities
HOUSTON INDS INC
LONG ISLAND LTG CO
NICOR INC
SPRINT CORP
TOTAL Utilities
TOTAL COMMON STOCKS
ACCRUED INTEREST
ACCRUED DIVIDEND
TOTAL PORTFOLIO
•
UNIT
COST
TOTAL MARKET
COST PRICE
RELIEF FUND
MARKET
VALUE
PRICING DATE: 09/30/92
DATE OF APPRAISAL: 09/30/92
% OF
% OF ASSET
PORTFOLIO CLASS
ESTIMATED
ANNUAL CUR
INCOME YLD
23.70 45,022.55 24.75 47,025.00 1.8 3.2 901 1.9
75.16 52,613.55 91.38 63,962.50 2.4 4.4 3,409 5.3
28.36 34,035.44 34.88 41,850.00 1.6 2.9 1,148 2.7
482.59
34.10
24.57
106.76
73.47
21.64
13.96
131,671.54
38,607.20 444.71
34,104.70 65.63
24,569.85 32.50
42,702.05 125.13
51,426.85 76.00
191,410.65
47,601.85 18.13
41,868.55 12.13
89,470.40
13.36 46,769.70 11.75
34.24
23.67
41.14
22.29
34,244.60
37,871.55
32,913.55
55,724.85
160,754.55
1,325,729.25
2,413,057.33
44.88
24.50
46.25
24.38
152,837.50 5.7 10.5 5,458 3.6
35,576.80 1.3 2.4 538 1.5
65,625.00 2.5 4.5 1,360 2.1
32,500.00 1.2 2.2 1,400 4.3
50,050.00 1.9 3.4 400 0.8
53,200.00 2.0 3.7 1,904 3.6
236,951.80 8.9 16.3 5,602 2.4
39,875.00 1.5
36,375.00 1.4
76,250.00 2.9
41,125.00
44,875.00
39,200.00
37,000.00
60,937.50
182,012.50
2.7 1,320 3.3
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5.2 2,220 2.9
1.5 2.6 1,680 4.1
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4,617.21 0.2
2,672,909.20 100.0 100.0 128,106 4.8
•
•
•
ROXBURY
CAPITAL MANAGEMENT
THIRD OUARTER LETTER TO CLIENTS
•
Third Quarter Results. The stock market
indices were mixed for the quarter. The
Dow Jones Industrial Index was down
0.6%, the S&P 500 was up 3.1%. Overall,
Roxbury -managed portfolios did some-
what better than the market averages for
the quarter. Your portfolio performance
report is enclosed with this letter.
The Economic Picture. Election year
jitters and the weak economy continued to
dominate financial news during the third
quarter. Hopes for a 1992 economic
recovery have been disappointed. U.S.
politicians have painted us into a corner.
During ten years of prosperity, no reserves
were set aside, deficits were ignored, and
domestic problems were not addressed
The usual prescription for a recession is to
cut taxes, increase spending, and lower
interest rates. Unfortunately, with the
deficit as large as it is, interest rates seem
to be the only available treatment for this
recession - and so far that has not been
enough. Even the Cold War "peace divi-
dend" has a dark side which is the loss of
jobs in the defense sector.
The economic picture is bleak but not
without its bright side. A long recession
will renew savings habits of Americans
and difficult times may make us more
competitive in the long run. The end of
the Cold War did not simply mean the
defeat of communism, it was a triumph
for consumerism as Russia, China, and the
Third World will begin to share the pros-
perity Europe, America, and Japan enjoy.
American companies are leaders in tele-
communications, consumer products,heal
th care products, food, entertainment, and
environmental services. We have a lot to
gain as the rest of the world grows.
The Investment Outlook Warren Buffett
usually answers questions about the mar-
ket outlook by saying that no one can
predict what the market will do in the
next six to twelve months. What matters,
he says, is how the companies you are
invested in are doing - are they profitable
and growing? If they are, then eventually
the stocks will go up and your wealth will
increase.
Roxbury portfolios are invested in compa-
nies that are prospering now, during the
recession. We are also investing in com-
panies that can compete domestically and
internationally.
We take heart in the fact that we have
been in a bearish stock market for nine
months. Most major stock groups have
had declines. There is little optimism or
speculative fever among investors. These
factors usually mean there is less risk.
While the current correction, which fol-
lowed a very strong year for investors in
1991, may have further to go, we are not
overly concerned. The "crash" of 1987
came very close to a market top after a
period of great speculation (new issues,
junk bonds, LBOs, etc) and interest rates
were much higher than they are now.
Looking out a year or longer, the present
could prove to be a very good time to
invest in stocks. The path will not be
smooth, it never is But for the first time
100 Wilshire Blvd., Suite 600 Santa Monica, California 90401 310 / 917-5600 FAX 3101917-2650
•
•
•
we are seeing the possibility of an eco-
nomic recovery in 1993 with lower interest
rates in Europe and Japan. And, no
matter how it comes out, this nasty elec-
tion will soon be behind us
Anthony H. Browne
Evidence that we have been in a bear
market in 1992 abounds. According to a
major brokerage firm, over two thirds of
all stocks are down 20% from their highs
this year. As Tony mentioned, we do not
feel the stock market is particularly risky
for these reasons:
Most Investors are not Bullish. Speculative
activity has declined. Last year's leading
groups, such as biotechnology, continue to
fall. The ratio of put -to -call options and
short sales of stock are reaching record
levels. Markets are most vulnerable when
investors are euphoric and speculation is
rampant.
Valuation levels are not unusually high.
The high price/earnings ratio currently
attributed to the Standard and Poors 500
is overstated due to weak earnings from
cyclical companies and restructuring char-
ges Normalized price/eamings multiples
of other indices are more reasonable and
well within historical ranges, especially
considenng current low levels of inflation
and interest rates. Price to historical book
value ratios continue to be less meaningful
as inflation continues to understate histor-
ical book value. Also, adjusted for infla-
tion, the Dow Jones Averages are well
below peak levels reached in the 1960s.
The election may already be factored into
the market Many investors feel a Demo-
cratic victory would not effect the stock
market as their platform is moderate.
However, record budget deficits, a weak
dollar, and already low interest rates may
not offer many options for fiscal stimulus
regardless of who is elected.
Roxbury's current straten is to focus on
businesses with strong franchises that may
see higher growth with a modestly improv-
ing economy. The weak economy of the
past several years has discouraged inves-
tors with regard to these companies, and
some are selling at attractive valuations.
Those companies that performed poorly
this last quarter could do much better
with mild economic growth. Industries
which we are currently analyzing include
pollution control, food retailing, specialty
chemicals, property/casualty insurance,
and energy.
Kevin P. Riley
Many of the questions I have received
from clients in the recent period have
centered around the currency crisis, the
effect on bonds should interest rates move
higher, the budget deficit, and the Ameri-
can Depository Receipts ("ADRs") in
which we have been investing.
Currency Crisis The currency crisis (and
resultant volatility) is a temporary disloca-
tion based on unrealistic expectations for
European unity. The good news is that
artificially high European interest rates
should decline, fostering worldwide eco-
nomic growth and easing pressure on U.S.
interest rates and the dollar.
Budget Deficit. We are not overly con-
cerned with the federal budget deficit,
even though it limits the increased govern-
ment spending option for improving the
economy. Although in nominal dollars
the deficit is at an all time high, as a
•
•
•
•
1
percent of GNP it is lower than at other
periods over the past fifty years. At this
stage, the deficit problem is still correct-
able.
Bond Prices. Should interest rates move
higher, the price of bonds would decline.
To mitigate this risk, Roxbury typically
invests only in intermediate-term bonds.
Intermediate-term bonds provide a better
yield than short-term bonds, while reduc-
ing the interest rate risk associated with
longer-term instruments Also, for those
clients who have requested it, Roxbury
will invest in high yield bonds. While high
yield bonds typically imply more credit
risk, the higher yield reduces volatility
from changes in interest rates.
ADRs. Roxbury has been purchasing
ADRs to invest in foreign companies.
ADRs are domestically -traded securities
which allow us to more easily and inex-
pensively purchase the equities of interna-
tional companies. We have been investing
in these foreign companies because they
are equal in quality to U.S. corporations,
have worldwide franchises, and represent
better values.
Year-end Tax Planning. For those of you
with taxable accounts, we would be
pleased to work with you and your tax
advisor in your year-end tax planning.
Please contact us if we can be of assis-
tance.
James E. Moore
•
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TOTAL PORTFOLIO