INVEST IN GOOD COMPANIES WHEN THEY ARE ABOUT TO BECOME GOOD STOCKS

• Buy businesses at reasonable valuations
• Buy businesses that create value for shareholders
• Take advantage of price inefficiencies resulting from irrational behavior
• Use sophisticated mathematical tools to identify inefficiencies
• Investment debate by experienced professionals
• Consistent, objective analysis
• Strict portfolio discipline

The recent behavior of stock price itself, and the perception of value, continually influence an investor’s willingness to buy and sell, which in turn produces significant price swings. This realm of financial analysis is called Behavioral Finance, and its effects are measured using tools that gauge the recent memory of market action and crowd response. Marque Millennium has pioneered advanced behavioral finance tools using the principles of chaos theory. The goal of these tools is to determine when price action deviates from the norm, and then to determine if it represents an investment opportunity. Each week we scan the stocks in our universe to identify situations in which the emotion of the crowd has led to an irrational security price and thus a potential buying or selling opportunity.

Over the long term, fundamental measures of value are the best gauge of a company's worth. Like most investors, Marque Millennium uses measures such as price to book, price to sales, price to cash flow, and price to earnings to determine value. Unlike other investors, however, Marque Millennium uses a proprietary technology that simultaneously weights fundamental measures while correcting for the type of industry represented. Our neural network system analyzes and evaluates the relationship between price and fundamentals, and then places it in the context of the industrial sector. Each month, new fundamental data and estimates are fed into the models to determine a fair market price for each stock in our large-cap universe. Each week, the top decile of undervalued securities are selected for additional study.

The final step in our discipline seeks to confirm or override the prior equity screening results. Fundamental valuation models are based on historic numbers and have trouble identifying companies or sectors that are breaking away from historical patterns. Stock price analysis may identify short-term trends that do not justify a long-term investment. We therefore look beyond current opinions to form views on future trends, using both conventional and unconventional sources. We look for companies that are creating economic value for shareholders, by focusing on competitive analysis, generation of capital, and allocation of capital by management, among other measures. Research may confirm the results of our models, or we may decide that external events or trends make them invalid.