BUY DISCIPLINE

• After TVM identifies a stock for purchase and the Investment Committee approves, the security must be bought.


• Technical analysis determines the entry point.


• Tandem does not presume to know the best entry point. Therefore, buys are typically incremental.


• Tandem does not impose arbitrary limits to the weighting a holding in a portfolio may attain. Rather, buying ceases at the Composite level when a stock reaches 3% of the Composite. Individual portfolios may see buying beyond the 3% level to match Composite holdings.


• INVESTMENT COMMITTEE AS ULTIMATE ARBITOR: The TVM process is designed to remove the human element until the final decision is made. The Investment Committee has the duty to overrule any buy signal given when it believes that market conditions warrant such action. A meeting of the Investment Committee requires that at least two portfolio managers be present.

HOLD DISCIPLINE

• Every stock held in the portfolio is regularly subjected to the TVM process and reviewed and ranking changes demand.
• Tandem considers its Hold Discipline to be “Buy and be Vigilant”.
• As rankings change, appropriate action is prescribed by  Tandem’s Buy and Sell disciplines.

SELL DISCIPLINE

• TVM SALES:  If a portfolio company has been held for at least one year and is ranked SELL by TVM, 25% of the position must be sold in every quarter it remains so ranked. TVM sales cease when the company is reduced to 1.50% of a portfolio. If a portfolio company has been held for less than one year but is ranked a SELL by TVM, a fundamental review is undertaken and the investment committee decides what, if any, action should be taken. There is no mandatory transaction prescribed for this situation.


• FUNDAMENTAL SALES: Fundamentals of all portfolio holdings are constantly monitored. If a stock fundamentally deteriorates, or becomes something not contemplated at time of purchase, the position must be liquidated.


• SIGNIFICANT PRICE MOVEMENT: For any portfolio company that has experienced significant price appreciation, a protective stop below its recent high price must be implemented for 25% of the position.  Significant price appreciation is determined by a member of the investment committee, and must have the majority vote to move forward with the stop. For any portfolio company that experiences 20% underperformance relative to the S&P 500, a fundamental review is undertaken and the investment committee decides what, if any, action should be taken. There is no mandatory transaction prescribed for this situation.


• IMPLEMENTATION OF SALES: Any time a portfolio company is designated for sale, the investment committee determines, using all available methods of analysis, a reasonable expectation of exit price, and uses protective stops under that price in case the price of the stock falls. When the situation permits in the opinion of the investment committee, incremental sales are most desirable.


• INVESTMENT COMMITTEE AS ULTIMATE ARBITOR: The TVM process is designed to remove the human element until the final decision is made. The Investment Committee has the duty to overrule any sell signal given when it believes that market conditions warrant such action. A meeting of the Investment Committee requires that at least two portfolio managers be present. .

Disclaimer