The Poplar Forest Cornerstone Fund investment objective is current income and long-term growth of capital. The Fund seeks to generate returns that improve client purchasing power over the long term, by building a balanced portfolio of debt and equity securities. Equity and fixed income weightings will be tactically allocated based on prospective return potential and perceived risk although equity exposure will not generally exceed 75% of net assets.
Management uses a long-term approach to security selection. Investments will generally be made with an investment horizon of three years, although individual investments may be held for shorter or longer time periods. The Poplar Forest investment team evaluates investment opportunities using bottom-up fundamental analysis, paying particular attention to the following factors:
- Expected future profits;
- Expected sustainable revenue and/or asset growth;
- Expected cash investment needed to support expected growth;
- Normalized free cash flow after considering the items above; and
- Valuation relative to normalized earnings and free cash flow after giving consideration to growth potential and financial strength.
In contrast to equity investments where capital appreciation is the goal, fixed income investments are selected with the objective of capital preservation and current income.