Adrian Chenault

South Texas Money Management (STMM) employs a disciplined equity investment process supported by quantitative tools for stock selection, portfolio construction and portfolio risk control, as well as fundamental research. For fixed income portfolios, the firm uses a disciplined bond selection process utilizing credit ratings reports and other fundamental credit research prepared by third-party independent research providers. STMM also utilizes macroeconomic research performed both internally and by third parties. The firm's Core Equity strategy includes two distinct styles: value and growth. The purpose of this style diversification is to participate in all market trends, whether driven by value or growth. STMM seeks to ensure that client portfolios have four levels of diversification: value and growth, sector and industry, size of companies (capitalization), and individual stocks. STMM uses a Value Screen to identify stocks that are trading at a low price-to-cash flow multiple, but have stabilized the business weakness that led to the low valuation. They also consider these stocks’ relative p/e to the S&P 500; balance sheet quality; and margins and cash flow, which must not be deteriorating. The firm's Growth Screen is designed to identify stocks with accelerating earnings and revenue growth rates. Equity investments generally may include stocks, REITs, publicly traded limited partnerships/trusts, ETFs, IPOs, mutual or common funds, and ADRs. If fixed income investments are appropriate, STMM uses issuers, rated A or better, with an emphasis on diversification. Maturity management is based on the current shape of the yield curve and the past 12-month trends in the yield curve. STMM's Tax Exempt Fixed-Income portfolios are diversified across various issuer types, for example, general obligation, revenue, city, county, school district, etc. Fixed income portfolios generally have an average credit quality of AA or better. Insured municipal bonds also have an underlying issuer rating of A or better. Maturities are limited to a maximum of 15 years. Fixed income portfolio duration is typically within +/- 25% of the duration of the Barclays 1- to 10-year Municipal Blend Index. Tax-Exempt portfolios are typically “buy and hold,” with the total return strategies employed only when market conditions warrant substantial strategy shifts.