Eagle Capital Appreciation Fund

The fund seeks capital appreciation by investing in companies that the portfolio management team believes have
the potential for attractive long-term growth in earnings, cash flow and total worth of the company. In addition,
the portfolio management team prefers to purchase stocks that appear to be undervalued in relation to the
company’s long-term growth fundamentals.

ClariVest Asset Management LLC is an affiliate of Eagle Asset Management, Inc. and the sub-advisor to the Capital Appreciation Fund and assumed management of the fund after the market closed on June 28, 2013.




Strategy

  • The manager’s philosophy centers on two core beliefs about investing. First, all things (e.g., companies, industries, sectors and economies) cycle. Second, most people forget or inefficiently react to this first thing. The manager focuses on identifying companies that surprise the market by their participation in an earnings growth cycle. The team seeks to earn excess return as corresponding investor cynicism about this participation declines from elevated levels.
  • Initial investments are focused on companies that have recently entered or are extending an earnings cycle. They tend to have an improving foundation of earnings, cash flow, sales, etc., and are typically surrounded by some level of cynicism or investor neglect.
  • The selection process is built on the idea that good investing discipline starts with an explicit identification of what one is looking for combined with the willingness and ability to look broadly for it. The manager believes quantitative tools are particularly good at addressing both these requirements. They force the investor to clearly identify the type of investment opportunity he or she seeks while allowing the investor to objectively look across a broad universe for those opportunities.
  • Starting the process with quantitative tools provides confidence that opportunities fit within the team’s philosophy but the manager believes that the subjective nature of investing requires the steady hand of an experienced professional. The manager’s long-tenured investment professionals use their judgment and expertise to confirm potential investment ideas uncovered by the process. The final decision is theirs to make.

Goals

  • Take advantage of the breadth provided by quantitative tools and the depth of qualitative analysis to identify both the rewards and the risks associated with potential investments
  • Maximize portfolio diversification through explicit early identification of the risks associated with each potential investment idea
  • Earn excess return by buying companies that “surprise” the market as they overcome negative or cynical sentiment

 

A Word about Risk

As with all equity investing, there is the risk that an unexpected change in the market or within the company itself may have an adverse effect on its stock. The biggest risk of equity investing is that returns can fluctuate and investors can lose money.

Growth companies are expected to increase their earnings at a certain rate. When these expectations are not met, investors may punish the stocks excessively, even if earnings showed an absolute increase. Growth company stocks also typically lack the dividend yield that can cushion stock prices in market downturns.