OUR DISCIPLINE

Possibilities open up
when discipline meets opportunity.

At Two Point Capital, our investment philosophy is built on a simple idea: the strongest opportunities are often found at the intersection of value and quality. We look for well-run companies with long-term potential that are available at attractive prices.

Let's meet

Painterly scene of hikers looking out over a sunset landscape

The Two Point Difference

Value + Quality(TM) | Synergy Equals Strength

The Two Point Investment Approach is based on the synergy created when the concepts of value and quality are both applied to investing. To qualify for a Two Point Portfolio, companies must have the qualities most relevant to long-term growth, qualities recognized and rewarded over time by investors, and be selling at a price below their current value.

Quiet lakeside landscape with pine trees

Two smart ideas are made stronger when they're combined. That's our experience of value and quality, based on over 30 years of investing. Our investment discipline is robust yet flexible enough to be effective in changing economic and financial conditions.

First, an inclusive approach to opportunity

The approach incorporates a careful and detailed analysis of the myriad factors that determine a company's quality and value. This approach means we can consider a broad range of securities investments. We are not limited by the strict style biases found within firms pledging to invest only on the basis of growth, or momentum, or value, or high quality.

In our search for investment opportunities, we consider companies in all industries, and companies considered to be small, medium, or large capitalization.

As a result of our broad approach, including a balance of industries and market capitalizations, and our long-term focus, we believe that the benchmark most appropriate to our performance is a full market cycle of the Russell 3000 Index.

Next, a rigorous focus on individual companies

Using strict quality metrics, we then narrow down the list of opportunities to begin thorough research on each viable candidate.

Our research is bottom-up or company-specific, analyzing each potential investment individually. We assess the relationship between each stock's value and quality as we make determinations about whether to include it in client portfolios.

We do not decide, for instance, that now is the time to make a play in energy stocks; if an energy company meets our inclusion criteria, we then assess it on its own individual merits to determine if "this" energy company makes the grade.

Over time, continuous and proactive portfolio improvement

Once a stock has been added to the portfolio, we continuously evaluate its value/quality relationship. Although any stock in the portfolio is one we would be comfortable holding for the long term, we do not hesitate to replace it with a stock that has a superior value/quality relationship.

We also maintain a steady assessment to keep an optimum relationship between value and quality at the portfolio level.

Three Investment Strategies: How much risk is right for you?

At Two Point Capital Management, we offer our clients three investment strategies, depending on their objectives and risk tolerance. Which of the following strategies is most appropriate for you? Contact us.

Each of our investment strategies is built on the Two Point Approach, which considers both value and quality.

Strategy 1: All Equity

This is our cornerstone strategy. Like all of our strategies, it is based on optimizing the value/quality relationship for each investment and the entire portfolio.

All Equity portfolios are comprised of 15 to 35 stocks and frictional cash. We manage each portfolio to maintain a balance among stocks of different size, industry and quality levels.

The purchase and sale of investments is executed aggressively and may generate significant trading activity, which may occur in intense bursts as dictated by changing market conditions and portfolio composition.

The objective of this strategy is to outperform the broad stock market as measured by a full market cycle of the Russell 3000 Index.

Annual turnover has ranged between 25 and 75 percent, but could be higher depending on opportunities presented by changing market conditions.

Strategy 2: Equity + Fixed Income

Balanced Account portfolios contain equities and bonds.

The equity portion is managed under our All Equity strategy with the same objective.

To reduce the portfolio's stock market risk, the balance of the portfolio is comprised of high-quality, fixed-income securities that are often held to maturity.

Our objective in determining the specific proportion of your portfolio to be invested in fixed-income investments is to assure your comfort with the level of risk.

Strategy 3: Concentrated Aggressive Equity

The Concentrated Aggressive Equity strategy is also based on the Two Point analysis of value and quality. Portfolios managed under this strategy are both more concentrated, with fewer, larger positions, and more aggressive; lower quality companies are considered if the value/quality relationship appears particularly attractive.

Cash positions are frictional.

By limiting investments to a small number of large positions, this strategy contains substantial security-specific risk, and the possible inclusion of lower quality investments may add to this risk. Strong or weak performance by a single investment will have a considerable impact on investment returns.

The objective of this strategy is to significantly outperform the broad stock market as measured by a full market cycle of the Russell 3000 Index.

Let's meet

The more time you invest in understanding yourself, your financial goals and your options, the more easily you will sleep at night.

Jack McGowan

Frictional Cash under the Two Point Approach

As a result of the simultaneous focus on valuation, quality and portfolio composition, cash positions are "frictional." Money market holdings are not targeted to be a certain percentage of assets managed, but are the result of a management process focused on the more important aspects of the portfolio.

As a result, money market holdings, like equity holdings, may change rapidly and with significant swings.

Your Next Chapter

When life opens up

Life is about to get richer. In experiences, opportunities, possibility and purpose. A sound financial strategy is only part of the equation. We know how to help your portfolio grow, but even more important, we care about what that growth makes possible.

Let's Talk

Possibilities open up when discipline meets opportunity.