Strategies/Products - ACM Institutional Services

ACM Separate Account Management Strategies/Products

CONCENTRATED CORE These portfolios are 90% - 100% stocks and managed for more aggressive growth. There are no capitalization or style restrictions, meaning that we identify the best companies across the entire stock spectrum. In order to consistently perform better than market indices, ideally portfolios are limited to 15 - 17 individual names. This type of concentration in the best companies puts these portfolios in the best position to achieve superior returns. This strategy is not suitable for all investors.

ALL EQUITY LARGE CAP CORE Portfolios following this strategy are also 90% - 100% equity, but are limited in exposure to mostly large and mega-cap names. This strategy also includes more diversification than the concentrated strategy, as portfolios may include up to 25 individual stock positions. Because these portfolios are large-cap and more diversified, there is less perceived risk in the portfolios (defined as beta risk and volatility).

RISK MITIGATION Mitigation of systemic risk is one of the most important aspects to portfolio management. Yet it rarely occurs for individual investors because most money managers lack the capability and conviction to do it, and do it properly. This is one of the key areas that sets ACM apart from the industry.

Our Concentrated Composite can be fully mitigated while the All Equity Composite limits the use of mitigation techniques. When our research points to a decided imbalance in downside market risk over upside market potential (due to economic or market-specific factors) ACM will move each portfolio to near market-neutral. By being near-neutral, client portfolio values will stay relatively fixed regardless of market direction. We utilize a variety of mitigation techniques. This allows ACM to be flexible with regard to specific client needs or to conform to most investment mandates.

"BUY AND HOLD" IS TRANSFORMED INTO "BUY AND MITIGATE" We are long-term investors of companies. We seek to identify the best businesses in the best industries, finding companies that will deliver growing wealth well beyond the intermediate term. This is the basis for "buy and hold". But company stock prices are are not islands, and operate in the murky sea of systemic valuations.We believe that markets operate much like stock price movements described by the Merton Model (or Mixture Model). This means that stock prices will be subject to periods of systemic jumps (both higher and lower) and periods of diffusive movements. This model of operation presents opportunities for long-term investors to put into action the most basic principles of investing - buying low and selling high.

Under the "buy and hold" method of investment, portfolio managers simply ride out any systemic storm, confident that the companies they own will survive and thrive. All that is required is patience. But this misses a strategic opportunity to enhance performance, and increase alpha.

ACM's "buy and mitigate" strategy captures the systemic opportunity. By mitigating client portfolios, ACM sells stock near the top of the market to purchase hedges. Near the bottom, the hedges are sold and the funds are used to buy quality companies at firesale prices. In the meantime, the hedges nearly balance the declines in long positions (the companies we want to own over the long-term) keeping the overall portfolio value near constant. The result is a massive increase in alpha, a successful application of "buy low, sell high", and very happy clients.

Our research has demonstrated our abilities to predict these systemic movements and we are confident that we will continue to in the future (past performance is, of course, no guarantee of future results). Together, our research plus "buy and mitigate" is a path, we believe, to significant outperformance and massive alpha. And as if that was not enough, these methods can greatly reduce beta, volatility, and all manner of risk.