Investment Strategy & Market Leaders

The Woodard & Company Investment Committee in session

— The Investment Committee in session —

Our Primary Management Style

Tactical Asset Allocation.

A disciplined, diversified framework that builds the portfolio around your circumstances, then reallocates across asset classes as the market and economic environment evolve.

Tactical Asset Allocation is our primary management style and is used in the majority of our client portfolios. The method bases portfolio structure on a risk adjusted basis combining stocks, bonds, and other asset classes to meet each client’s needs and objectives, incorporating established portfolio theory with our experience in markets, trends, and the economy. From that foundation, we use institutional class no-load mutual fund and exchange traded fund management in different asset classes to construct a sound and diversified investment portfolio.

Once the portfolio is built, our work is not finished, it has only begun. The portfolio is continuously reviewed, and we make ongoing tactical reallocations to reflect the changing investment environment. These reallocations are disciplined, not reactive. We move deliberately, in response to meaningful economic and market developments, not in response to headline noise.

The Process

How Tactical Asset Allocation works.

From the initial risk profile through continuous reallocation, the process is deliberate at every stage.

i. Client Discovery and Risk Profile.

We employ a questionnaire to determine each client’s circumstances, objectives, and risk profile. The client may revise the profile at any time as life circumstances, income needs, or market outlook shift. The resulting picture of the client’s situation is the foundation on which every allocation decision rests.

ii. Portfolio Construction.

With the client’s profile as the starting point, the client, with the advisor’s assistance, selects an appropriate allocation across asset classes, domestic equities, international equities, fixed income, cash equivalents, and alternatives where appropriate. The allocation is further evaluated using established portfolio theory, ensuring the portfolio is well-diversified and the risk-reward characteristics are appropriate for the client’s objectives.

iii. Fund Evaluation and Selection.

Fund evaluation and selection is another key component of our money management philosophy. We review and analyze which fund managers we perceive as superior within their particular disciplines. The review draws from online database research, resource references including Morningstar, Standard & Poor’s, and Value Line, along with current periodicals, specialty research, annual reports, prospectuses, SEC filings, and company press releases.

All funds used in our portfolios are no-load, meaning no commission is charged at the point of purchase or sale. All research is paid for by the firm, we accept no soft-dollarSoft-Dollar ArrangementsAn arrangement under which a brokerage firm provides research or services to an advisor in exchange for directed trading. This can create conflicts of interest. Woodard & Company pays for its research directly.Close × arrangements, and no fund company compensates us for placement.

The complete list of analytical platforms, financial press sources, and fund company research we rely on is maintained on our Research page →

iv. Continuous Tactical Reallocation.

Portfolios are continuously reviewed, not quarterly, not annually, but continuously. The Investment Committee meets regularly to assess economic, financial, and market data, both current and historic, and to make tactical reallocations to address market and economic variables. These reallocations may shift weight between asset classes, rotate exposure among sectors, or change fund selections within an asset class, always in service of the client’s stated objectives.

The goal is not to predict short-term market movements. It is to ensure the portfolio remains appropriately positioned as the real economic environment changes around it.

v. Research, In-House.

Woodard & Company conducts its own research in support of our investment strategy. The Investment Committee has desktop access to real-time financial, economic, and company-specific data through external services, but investment decisions are made internally, by our team, never outsourced, never delegated to a black-box model.

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Diversified across asset classes

Domestic and international equities, fixed income, cash, and alternatives where appropriate, weighted to the client’s objectives.

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No-load mutual funds

Every fund in the portfolio is no-load. No commissions at purchase or sale. No compensation to our firm from any fund company, at any time.

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Continuous review

The Investment Committee meets regularly. Tactical reallocations are made in response to meaningful changes, not daily noise.

The Market Leaders Portfolio

A focused portfolio of blue-chip equities.

For clients seeking equity management, “Market Leaders” is a portfolio of individual stocks we invest in that are the leaders of their respective industries which typically means the best of the “blue chip” stocks.

The selection process for Market Leaders has varied little since inception in 1985. It is, above all, a “top-down” stock selection concept. We look for businesses that lead their category: companies that have proven most successful in their industry, that set the standard for service or product quality, and that, while often the largest by capitalization, are not selected on size alone. These leading companies earn primary consideration for ownership because they have demonstrated that they are the best, or likely to become the best, in their respective sphere.

These large, well-capitalized companies typically have less downside risk and volatility than other stocks during difficult market periods, fewer bankruptcies, fewer dislocations. That matters over a full market cycle.

20–50

Core Holdings

Large-Cap

Predominantly Equity

S&P 500

Generally Sector-Neutral

John B. Woodard, Jr., the firm's founder, at his desk researching individual companies

The Intent

Businesses we would prefer never to sell.

The stocks selected for Market Leaders are not typically anticipated to be short-term holdings. They are purchased with the expectation that the company is one we could hold permanently.

Looking out to the future, we would like to think that every company we own in the portfolio is one we would never have to sell, one we would want to buy and hold the position permanently. Consequently, the portfolio is expected to be tax-efficient and not a trading vehicle. If the companies in the portfolio remain well-managed, and they keep doing what they have done, remaining on the leading edge of their market, continually improving and innovating, providing the very finest in goods or services, our clients will be rewarded.

Market Leader companies have the resources to recruit and retain the best management and the most capable employees. They have the capital for research and development, for acquisitions that genuinely contribute to their success, and for domestic and international expansion where the opportunity presents itself. Due to the best management and the deepest pockets, these companies typically weather downturns and overcome difficulties that prove detrimental to smaller, less well-capitalized organizations.

The benchmark we measure ourselves against is the S&P 500. Our objective, over full market cycles, is to outperform the S&P 500 net of fees. That is the test we hold the portfolio to, and the test by which our clients should hold us accountable.

How the Portfolio is Managed

Decisions driven by conviction, not noise.

The stocks in the Market Leaders Portfolio are continuously monitored. Each company stock is evaluated relative to its industry group, the broader market, fundamental measures, the quality of company management, and the general condition of its business. When sector weightings are considered, we refer to the institutional reports for each industry: the reports indicate the timeliness of the industry and what is happening overall, and timeliness helps determine from which industries within a given sector the best stocks should be drawn.

The numbers.

We compare a company’s earnings against its respective industry. We look at the earnings per share growth rate for the individual stock, and the price-to-earnings multiple for the stock. Then we compare those numbers with the overall P/E multiple of the industry and the EPS growth rate of the industry. The best growth companies typically trade at higher P/E multiples, but they must justify those premiums with correspondingly higher earnings growth rates relative to their peers. Common sense remains the guide.

The problems to look out for.

A review of the annual report and the daily news can reveal problems that matter: management issues, flaws in leadership, a culture no longer committed to the shareholder. Poor capital allocation is often apparent on the page. A notable example we followed closely was Sara Lee, a once-local corporation whose new president in 1992 chose to employ “vertical integration” by purchasing existing labor-intensive textile plants precisely as the textile industry was transitioning to China and the Far East with NAFTA. The firm was, in effect, buying 1920s technology at a premium. Sara Lee had, in the twenty years prior, returned approximately 32% annualized. It no longer exists as such.

Some companies course-correct with new management. Many do not. The annual report, read with common sense, will often tell you which is which.

When we sell.

We make changes in the portfolio when there are compelling fundamental factors presenting themselves. We do not anticipate trading the portfolio based on temporary issues or what may be transient characteristics. A sale generally follows a deterioration in the original investment thesis, rather than short-term price movement, quarterly noise, or macro headlines. The kinds of developments that may warrant a sale include a sustained management failure such as poor capital allocation or a culture no longer focused on the shareholder, an irreversible competitive shift that leaves the company on the wrong side of its industry, growth that has flatlined with no credible catalyst to restart it, broad sector overexuberance in which an entire group re-rates irrespective of fundamentals, or the identification of a clearly superior holding within the same sector.

Whether a client is best served by Tactical Asset Allocation, the Market Leaders Portfolio, or a combination of the two, is a conversation, and that conversation begins with understanding what the client is actually trying to accomplish.

Daily Discipline

The Daily Macro Briefing.

Each morning, before the market opens, our team produces a written briefing that synthesizes the prior session and the day ahead into actionable intelligence for our advisors and the Investment Committee.

The work draws from a curated set of premier research sources: Bloomberg, the Wall Street Journal, Yardeni Research, Goldman Sachs Portfolio Strategy, Fidelity quantitative research, the Nuveen Portfolio Strategy Group, T. Rowe Price, StreetAccount, FactSet, Dow Jones Newswires, and others. From those inputs, we distill the day’s most material developments across five domains.

Macro and Geopolitics.

Federal Reserve policy expectations, Treasury yields, oil markets, currency dynamics, central bank decisions abroad, and geopolitical developments with material market implications.

Markets and Earnings.

Pre-market futures, overnight Asian and European session performance, sector rotation patterns, S&P 500 earnings progression, and detailed coverage of Market Leaders portfolio constituents reporting that week.

Cross-Asset Analysis.

Credit spreads, sector valuation percentiles, fund flows, sentiment indicators, and the structural market dynamics that inform positioning decisions.

Earnings Reports.

Close coverage of earnings from the companies we follow. We track results, guidance, and management commentary as they are released through the season. The specific companies are not listed here, as doing so would not be appropriate under applicable securities regulations, but earnings developments among the businesses we own and watch are a central input to the briefing.

Portfolio Implications.

Specific, actionable framing tied directly to the Market Leaders portfolio, with sizing considerations, committee discussion items, and clear acknowledgment of forecast risk.

Talking Points Recap.

Each briefing closes with a concise summary of the day’s key threads, market levels, earnings notes, and pending decisions for advisor reference.

The briefing is produced in two formats, a focused daily summary and an extended edition with deeper thematic coverage. Both are built to firm brand standards in Garamond typography with the firm’s signature gold and black palette, formatted for internal advisor use.

The framework emphasizes balanced, capitalist analysis with disciplined sizing, broad diversification, and exits on thesis deterioration only. Forecasts from external research providers are clearly attributed and flagged for revision risk. The work is, in short, an everyday expression of how this firm thinks.

Two disciplines. One philosophy.

One committee. One standard.