Our Strategy • Performance

Fried Investment Objective
Our overall investment objective is to capture superior returns without taking on the excessive risk and tax liability that go along with many of today’s popular hedge fund and derivative strategies. We seek excellent results by investing in companies that exhibit some of the following characteristics (along with a decrease in the number of outstanding shares, due to corporate share repurchases).

Strong prospects for growth
         •  Strong financial condition
         •  Outstanding management
         •  An advantage or edge over competitors
         •  Undervalued current market price, in relation to future prospects
         •  High profit margins
         •  Low relative P/E

Fried Sell Strategy

We may sell stocks for any of the following reasons:

         •  If the rate of share repurchase falls off or ceases.
         •  If the fundamentals of a company in which we have invested have deteriorated and it no longer meets the
            above-mentioned criteria.
         •  If the company tells us its shares are overvalued by issuing more shares (the reverse of the buyback process).
         •  If the client needs the money.
         •  If a stop loss is triggered.

By following a disciplined sell strategy we avoid dependence on a single Sector or security.

Five Hallmarks of the Successful Buyback Strategy

•  Narrow The Universe
- By selecting primarily from a universe of companies that are repurchasing their own shares, we start with a select group of companies that generate enough cash flow to both grow their business and repurchase stock at the same time. Over time, this is a powerful creator of value for the companies’ owners, the shareholders.

•  Stock Selection
- Once we have identified a list of potential companies for investment, we reduce that list to a select a few that meet our strict criteria.  As a rule we only invest in companies that have recently repurchased a significant number of shares on the open market. (We will occasionally take advantage of “non-buyback companies” if a special situation presents itself.  However, we will only invest a small percentage of funds in this fashion.)

•  Staying Invested
– We follow investment rules that we have developed over time. These rules keep us focused in our quest to avoid becoming overly aggressive when the market rises rapidly and overly pessimistic when economic news is negative.

•  Qualitative Analysis
– Our proprietary stock screening system takes the guesswork and emotion out of deciding what to buy and when to sell.  Our system has been developed via third party contract work in order to avoid research bias.  While we are obliged to caution that past results do not guarantee future performance, we are comfortable with sound theoretical basis of our strategy.

•  Risk/Reward
- Our goal for our equity portfolios is to out-perform the S&P 500 by 3%-5%, annually, net of fees. We seek to achieve this goal without the use of leverage, options, margin or any other high-risk strategy.