Carnegie Investment Counsel Blog

How Our ‘Counsel’ and Team Approach Helps Us Make Investment Decisions

Posted by Greg Halter, CFA on Feb 16, 2021 1:30:00 PM

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On a monitor across from my desk, two screens share constantly updating market news from earnings reports to headlines. On my phone, Twitter flashes the latest evaluations and thoughts from, well, thought-leaders. Bloomberg provides analytics, data and even more financial news. The flow of information is good and valuable. Everyone can access this information. It’s a far cry from years ago, when we had to wait to receive faxes of earnings reports. Now financial information is certainly becoming more “democratized”. But these volumes of information are a challenge for individuals to process, even if those individuals are professionals.

At Carnegie, the word “counsel” in our name speaks to the expertise we bring to investment management. But how does the Carnegie approach work in practice? How do we synthesize information together as a team to help portfolio managers digest it and make decisions for our clients’ portfolios?

 

Understanding Research at Carnegie

Today, information is readily available. As professionals, we invest in sources or aggregators like Bloomberg, Value Line or Morningstar for analysis. But keep in mind, it’s not that we are privy to any information that is not publicly available. Anyone can access any of the massive amounts of earnings reports, press releases, corporate moves, news articles and more that impact stock prices every day.

Part of the Carnegie “secret sauce”, I believe, is in how we sift through the plethora of information so that our portfolio managers can make decisions for our clients’ in line with their goals and risk tolerances. In other words, our secret sauce is collaboration of seasoned advisors; the team effort.

 

The Team Approach to Financial Management

This team effort starts on Monday mornings with our all-encompassing Investment Committee meetings attended by portfolio managers (in-person in Cleveland and virtually for the other seven Carnegie locations). On Tuesdays, that group narrows to a more focused group where there is always a lot of good chatter as we filter information about the economy, industry sectors and specific companies.

Through Microsoft Teams, we also leverage multiple channels to share and comment on the latest news and analysis. We have built, and continue to build, Teams channels for different industry sectors such as Technology, Health Care, Industrials, as well as for specific companies. Targeted podcasts and blogs are shared for the benefit of all as well.

In the Cleveland office, for example, we also have a physical space we call the Bloomberg Room. It has four workstations where regularly you will see four to five people sitting together (at a safe social distance of course) talking about stocks and ideas about current thinking. People are continuously bringing up differing opinions and building consensus.

Coming together through MS Teams, by phone or in person are very powerful ways for us to distill information. It brings together years of combined deep and diverse investment experience. The people on our team have seen a lot in those combined years, including volatile markets and steady ones. The diverse backgrounds of our investment team allows for robust intellectual capital that we hope to translate into better returns for our clients. Not being pigeon-holed into one style or way of thinking can provide an avenue to nimble investment decisions in today’s ever-changing landscape. The result is our portfolio managers are better able to make portfolio decisions. 

 

The Periodic Table of Equities (“PToE”)

There are thousands of stocks, of course, so how are we able to focus conversations and move forward? One innovative tool devised at Carnegie to corral the counsel approach is what we call the “Periodic Table of Equities.” It is a one-page cheat sheet that looks very similar to the Periodic Table of Elements. We constantly keep this up-to-date. Each block in the table represents one of the approximate 100 stocks we actively own and follow. Different colors illuminate the 11 different market sectors including Technology, Health Care, Financials and Consumer Discretionary. In the cells are the names and stock symbols of companies that have been vetted as a group because we have faith in them to be investable assets for our clients. These cells include items such as price/earnings ratio, earnings growth and more.

On Monday mornings, portfolio managers take turns leading an investment meeting and covering a sector. For example, I’m in charge of researching the Industrial and REIT sectors. Rotating through the industry sectors approximately two times per year provides coverage of all names on the table and means portfolio managers have “skin in the game.” During our Tuesday meetings, we delve into the sector discussions with more vigor, and will sometimes remove a company where the fundamentals to the story appear to have changed, adding a new company that has exciting potential (a so-called “disrupter”).


The counsel and team approach of Carnegie has become even more important than ever
as the pace of change and access to information grows exponentially. In another article, I’ll share more on how we are researching and charting trends for 2021.

 

Greg HalterAbout Our Author Greg Halter

Greg Halter serves Carnegie Investment Counsel as Director of Research, where he coordinates all aspects of both equity and fixed income research materials. Greg accumulates and distills appropriate materials for portfolio managers to use in building and managing client portfolios effectively.

 

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Disclosure: This was prepared by Carnegie Investment Counsel (“Carnegie”), a federally registered investment adviser under the Investment Advisers Act of 1940. The information is provided as of the date indicated and believed to be reliable. Carnegie assumes no obligation to update this information, or to advise on further developments relating to it. This is prepared for informational purposes only and should not be construed as personalized tax or investment advice. Carnegie does not provide tax advice or services.

 

 

Topics: Investing, Wealth Management

Greg Halter, CFA

Written by Greg Halter, CFA

Greg Halter serves Carnegie Investment Counsel as Director of Research, where he coordinates all aspects of both equity and fixed income research materials. Greg provides the appropriate materials for portfolio managers to use in building and managing client portfolios effectively.

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