General Louis Wilson Fund
Student Managed Fund at Millsaps College
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PHILOSOPHY OF THE GENERAL LOUIS WILSON FUND


OBJECTIVE:  

Education in investment decision-making is one of the primary goals of the fund. We seek to develop skills in evaluating economic, industry, and security analysis, and to encourage effective communication of the research product to others.

RETURN REQUIREMENT:  

The fund seeks to obtain a favorable total return on invested assets, with an average return (calculated on a five-year basis) target, which is at least equal to the average CPI Inflation plus 6 percent. The long-term goal is to outperform a blended benchmark rate of return of the S&P 500 and Russell 2000 Indexes by achieving long-term capital appreciation.

 
 

<>STRATEGY OF THE GENERAL LOUIS WILSON FUND

OBJECTIVE: LONG TERM CAPITAL APPRECIATION

The Wilson Fund maintains a policy of capital appreciation through investment in securities judged to be undervalued and thus positioned for significant comparative appreciation. 

<>PORTFOLIO GUIDELINES:   

COMPANIES WITH:  

  • Excellent Management and strong business franchises. 
  • Evidence of growing markets and/or market share. Growing companies in growing industries are favored.
  • High ROE, ROA, and profit margins; demonstrated consistent earnings power
  • Low risk measures and strong financial condition
  • Products that are understandable
  • Low institutional following because they are good candidates for original security analysis.

COMPANY VALUATION:

  • High rate of return based on a discounted cash flow model (the Ouma Model and other dividend discount models)
  •  Low Market/Book Value and high growth/PE ratio (Lynch Ratio)  

PORTFOLIO:  

In order to understand each company, we target holding no more than 12 investment positions diversified by industry.  

In order to minimize transaction costs, low portfolio turnover is preferred.  

BONDS:  

Total return of fixed income instruments is stressed.  

DERIVITIVES:

Calls and/or Puts may be used to reduce the risk of certain holdings.

(reordered November 22, 2005)