Creating an Investment Portfolio

The creation of an investment portfolio begins with its clients and a detailed discussion of:

• Financial Goals
• Risk Tolerance
• Liquidity Needs
• Investment Horizon
• Overall Financial and Tax Picture

Given an understanding of the above, Pendragon constructs a customized portfolio for its clients that reflect these attributes. In building the portfolio, Pendragon employs a combination of strategies and tactics.

Equity Strategies

Core Value Equity Selection
Investments are selected by following the principles of Graham & Dodd. The portfolio invests in low P/E, low P/B securities, “growth at the right price” securities, and shareholder friendly companies. Emphasis is on small to mid-cap companies.

Dividend-Paying Stock Selection
These stocks are selected to generate either higher tax advantaged income or to have the potential to increase their dividends. To enhance income, covered call writing may be used. The focus is on mid to large-cap companies.

Balanced Strategy

Index,  Sector and International ETFs
Exchange-Traded Funds are a diversified way to invest in indices and sectors of the market that we believe will outperform. The strategy includes investments in foreign country ETFs.

Fixed Income Strategies

Intermediate Taxable Bonds 
Individual corporate bond issues are chosen with staggered maturities from one to ten years. The structure provides flexibility, liquidity and some protection against rising rates through reinvestment of the bonds that mature each year.

Intermediate Municipal Bonds
Structured like the Taxable Bonds but Municipals are tax-exempt bonds issued by state and local jurisdictions, this account is best suited for non-retirement accounts of individuals in high tax brackets.

Specialty Strategies

Pendragon Special Value Fund LP
This portfolio, structured as a limited partnership, invests primarily in companies in the banking, real estate, leasing and specialty financial services industries.  In addition, the partnership seeks out opportunities in all industry groups in business turnarounds, spin-offs or other special situations.

Pendragon Trading Plus Portfolio
Employs a disciplined short-term trading strategy based on a combination of dollar-cost-averaging and reversion-to-the-mean.  The portfolio uses levered Index ETFs as the principal trading securities.  These are complemented by holdings in MLPs, dividend-paying stocks, REITs and BDCs to off-set volatility and provide income. The Trading Plus Portfolio is not based on the value investing process inherent in Pendragon’s other portfolios.  Trading Plus seeks capital appreciation through a short-term trading strategy.  Investors must understand that as a short-term trading vehicle, account values may fluctuate significantly.

Note: Our clients may have different combinations of strategies and may have different individual investments within the various strategies depending on the clients’ goals, needs and risk tolerance as well as available funds, tax situations and market conditions.