Thank you for
your interest in MCGEHEE CAPITAL MANAGEMENT, INC!
The focus of our stock
selections are based on technical chart readings, fundamental valuations,
cyclical tendencies, and most importantly our proprietary timing tool, "The
McGehee Trend-Turn Indicator."
There are five steps in the highly disciplined stock
selection process at McGehee Capital Management. The first step is the very
unusual, yet highly disciplined "top- down" stock selection process. While the
"top-down" approach goes against the grain of most stock market gurus, McGehee's
extensive research proves that certain stock groups outperform others during
both bull and bear market cycles. Concentrating in these stocks should help
McGehee outperform the market over the long-term.
The second step is to
use the"McGehee Trend-Turn Indicator." This is our proprietary
market-timing tool developed over the last 30 years. While most will tell you it
is impossible to time the market, our indicator has routinely called market turns allowing us to raise capital during corrections.
The third step of due diligence involves
the analysis of individual stock charts to identify those technically poised to
outperform the market. This technical analysis can help identify either stocks
with a high degree of relative strength or those that are oversold, both basing
for an advance.
The forth step involves fundamantal analysis of companies
chosen in steps one and three. Among the criteria used are: increasing revenues
and earnings per share, improvement in profit margins, reasonable price to
earnings ratio based on expected earnings, and market niche.
step involves a stock allocation model allowing McGehee to attempt to produce
balance portfolios with respect to risk. The Agressive Growth Portfolio contains
approximately 20% of its stocks invested in well established
large-capitalization stocks, 50% in moderately established mid-cap stocks with
moderate risk, and 30% in lesser known small-capitalization stocks with a high
risk/reward ratio. In the Growth Portfolio approximately 70% of the stocks will
be invested in established large capitalization less risky stocks and 30% in
moderately established mid-cap stocks with moderate risks.
The value of this rigorous five step due diligence has been
extraordinary. Each portfolio contains between 15 and 40 stocks meeting our criteria. The Growth Portfolio, and the Balanced Portfolio have low turnover
rates, thus allowing for long-term capital gains. The Aggressive Growth
Portfolio turnover is higher, with some long-term capital gains. Over the
intermediate and long-term our portfolios tend to outperform their
"FIXED INCOME PHILOSOPHY"
income investment objective is to generate competitive total returns, with an
emphasis on protection of capital. To reach these objectives we include the
following factors in our decision making process: interest rate trends, maturity
structure, and quality. We are more interested in holding issues to maturity,
thus receiving interest payments, than we are in trading issues for capital
The first and most important step in our process is to
forecast the trend in interest rate movements. The trend forecast starts with an
in-depth technical analysis using a broad varity of interest rate charts.
McGehee follows that with fundamental macro-economic analysis, developing a
model for the economic outlook and inflation.
Secondly, a maturity
structure is selected to take advantage of positive interst rate trends or to
protect against negative interest rate trends. There are times when we
concentrate on the highest quality government bonds or short-term instruments
and times when we concentrate on high quality corporate bonds. This depends on
credit spreads and our analysis of macro-economic conditions.
We invest in fixed income mostly thru ETFs. The advent of fixed income ETFs allows diversity, liquidity, hedging and professional management. Money market funds may also be used as part of an investment philosophy and/or hedge against market movement.
"BALANCED PORTFOLIO PHILOSOPHY"
Portfolio mixes both stocks and fixed income instruments. This gives one the
safety and current income of fixed instruments and the long-term appreciation of
stocks necessary to historically beat inflation. By having exposure to two
different asset classes, which often move in oppisite directions, one usually
reduces the volitility associated with just one asset class.
approach to the proper mix between stocks and fixed income for an individual
investor is obtained by using the following formula: 120 minus investor's age
equals assets in stocks. The remainder will be allocated to fixed income. This
enables one to automatically become more conservative with age. For institutions
the ratio will be determined by economic conditions. Of course McGehee is here
to serve the needs of our clients, therefore, we can work with you to customize
your asset mix depending on individual risk tolerance, time horizon, and income
Finally, we do not necessarly seek capital gains by trading
fixed income instruments. We will however time the market to take advantage of
inefficiences between short-term interest rate trends and long-term rate trends.
Thus tending to invest near the optimum price entry
and FEE SCHEDULE"
McGehee Capital Management
offers the following portfolios:
1) AGGRESSIVE GROWTH: This
portfolio will be invested in large, medium and small capitalization stocks,
which we view as having above average potential for price appreciation. Many of the stocks pay good dividends.
The benchmark will be the S&P 500 Index. The
portfolio will be mostly invested in medium capitalization stocks, with some
small and large capitalization stocks mixed in. Some positions will be held for
long-term capital gains. The portfolio will inherently be subject to a medium risk/reward ratio. The portfolio is usually 100% invested in stocks. From time
to time a percentage of the portfolio can be in cash fixed income or short the market to
protect against pullbacks. Turnover is high.
GROWTH: This portfolio will be invested in large to medium capitalization
stocks, which we view as having above average potential for price appreciation.
Many of the stocks pay really good dividends. The benchmark is the S & P 500 Index.
Most stocks will be held for long-term capital gains to take advantage of the
lower tax bracket. The portfolio is usually 100% invested in stocks. From time
to time a small percentage of the portfolio can be in cash fixed income or short the market
to protect against pullbacks. Turnover will be moderate.
3) BALANCED: This portfolio will be invested in stocks and fixed income
securities. The current return(i.e. dividends and coupons) will be higher than the above portfolios. The
ratio of stocks to fixed income will vary. For institutions the ratio will be determined by economic
conditions. For individuals the following formula is suggested. 120 minus investor's age equals
pertcentage of portfolio in stocks. If you prefer a set percentage in fix income that can be specified.
We offer 3 options of the Balanced portfolio.
80% stocks / 20% fixed income; 70% stocks / 30% fixed income; 60% stocks / 40% fixed income.
Past performance does not guarantee future results!
Account Total: First $500,000 Next $500,000 Next $4 million Next $5 million
-AGGRESSIVE GROWTH AND GROWTH PORTFOLIOS (annual fee):
-BALANCED PORTFOLIO (annual fee):
Fees on assets over $10,000,000. are negotiable.
Minimum Account Size: $100,000.
A quarterly fee is charged in advance at the rate of 1/4 of the above percentages on the account total of the last business day of the previous quarter.
Fees are calculated based on the total value of one person's accounts. This fee is deducted from the Client's account and paid to McGehee Capital
Management, Inc., unless otherwise agreed to in writing. McGehee Capital Management may maintain a cash position or fixed income in any account for
defensive purposes at any specifix point in time, depending upon perceived or anticipated market conditions/events (there being no guarantee
that such anticipated market condition/events will occur). All cash and fixed income positions (money market, etc) shall be included as part of
asstes under management/account total for purposes of calculating the advisory fee.
Past performance does not guarantee future result Stocks and fixed income instruments may lose part or all of their value.
If you are interested in our managed accounts,
please contact us for our Brochure(this is required by the SEC).
Brochure contains even more information including ADV Form Part II, and
The sign-up is simple and we will lead you through the
process. E-mail, call or write Stewart B. McGehee: