2. 2
Investment Philosophy
We Believe:
Investment behavior creates
opportunities that passive management
does not fully capture
A systematic disciplined investment
process incorporating both quantitative
and qualitative elements identifies
companies with above average return
potential
3. 3
Price Momentum / Earnings Outlook /Exogenous Factors
Capture Quality Ratings and Fundamental Ratios
Appropriate Style Universe
Quantitative Analysis
Portfolio Optimization
Qualitative Analysis
Portfolio Monitoring
Re-optimization
Sell Disciplines
Investment Process: A Disciplined Approach
P O R T F O L I O
4. 4
Quantitative Ranking Model
1. Proprietary Quality Rating
32 specific standards in four categories including
liquidity, financial strength, profitability and growth
2. Earned Return
A measure of return to investors
3. Valuation-Adjusted Earned Return
Historic R.O.I. adjusted for current valuation
4. Earnings Momentum
Combines Wright’s historic earnings measures and
projected consensus earnings
Factor
weightings
are
dynamic
and are
regularly
reviewed to
validate
predictive
strength.
5. 5
INVESTMENT ACCEPTANCE + FINANCIAL STRENGTH
+ PROFITABILITY & STABILITY + GROWTH
= INVESTMENT QUALITY
32 SCREENS OF THE WRIGHT QUALITY RATINGS
WRIGHT
QUALITY
RATING
Investment Quality Averages of All Stocks on "The Approved Wright Investment
List" - Minimum Listing Requirement Standards
INVESTMENT
ACCEPTANCE
FINANCIAL
STRENGTH
PROFITABILITY
& STABILITY
GROWTH
MARKET VALUE
TOTAL
All Shares
Outstanding
3 Year Average/
Current
PUBLIC
Excluding
Closely Held
3 Year Average/
Current
3 Year
Average/
Last 12 Months
TRADING
VOLUME
TURN-
OVER
RATE
EXCHANGE
MARKETS
INSTITU-
TIONAL
INVESTORS
SHARE-
HOLDERS
CLOSELY
HELD
SHARES
% of Total
3 Year
Average/
Current
SHAREHOLDERS'
EQUITY
TOTAL
Capital &
Surplus
% OF CAPITAL
Equity, Pfd Stock
& Long Term Debt
PRE-
FERRED
STOCK
LONG
TERM
DEBT
TOTAL
DEBT
% OF
CAPITAL
FIXED
CHARGE
COVERAGE
RATIO
LIQUIDITY
QUICK
RATIO
WORKING
CAPITAL
Current Ratio
Current Assets/
Current Liabilities
Cash &
Receivables/
Current Liabilities
% of Capital
Equity, Pfd Stock
& LT Debt
Equity, Pfd Stock
& Long Term Debt
% of Capital
Equity, Pfd Stock
& LT Debt
PROFIT RATE OF
EARNINGS
ON EQUITY CAPITAL
BASIC
TREND
STABILITY
INDEX
CASH EARN PER SHARE
STABILITY
INDEX
OPERATING
INCOME
PRE-TAX
INC TO
TOTAL
ASSETS
Adjusted
Annual Rate (1)
% of
TOTAL
CAPITAL
Adjusted Rate
SALES/REV
GROWTH
ASSETS
GROWTH
Annual Rate
Per Share
EARNED
EQUITY
GROWTH
INVESTMENT
ACCEPTANCE
FINANCIAL
STRENGTH
+
+
+
=
PROFITABILITY
& STABILITY
GROWTH
INVESTMENT
QUALITY
4 MAJOR
INVESTMENT
QUALITIES
32 Specific
Quality
Standards
Number of
Funds,
Insurance Cos.
TIME-WEIGHTED
NORMAL
TIME-WTD
AVERAGE
& TREND
CASH EARN RETURN
ON EQUITY
RETURN
ON
ASSETS
OPER INC
to TOTAL
ASSETS
Annual Rate
Per Share
Annual Rate
Per Share
OPERATING
INC
GROWTH
NORMAL
EARN
GROWTH
GROWTH
Adjusted
Annual Rate
Per Share (1)
DIVIDEND
GROWTH
Adjusted
Annual Rate
Per Share (2)
Index of Minimum Standards for Listing on
The Approved Wright Investment List
A: Outstanding
B: Excellent
C: Good
D: Fair
Quality Rating
QUALITY
RATING:
28,000
names are
screened
through a
proprietary
process to
assign a
quality
rating
6. 6
Quantitative Ranking Model
1. Proprietary Quality Rating
32 specific standards in four categories including
liquidity, financial strength, profitability and growth
2. Earned Return
A measure of return to investors
3. Valuation-Adjusted Earned Return
Historic R.O.I. adjusted for current valuation
4. Earnings Momentum
Combines Wright’s historic earnings measures and
projected consensus earnings
Factor
weightings
are
dynamic
and are
regularly
reviewed to
validate
predictive
strength.
7. 7
Qualitative Analysis – Porter’s Five Forces
Threat of new entrants
Bargaining
power
of buyers
Bargaining
power
of
suppliers
Rivalry among
existing firms
Availability of
substitutes
