Our sell discipline is one of the most important aspects of the investment management process. Selling is based on the same three factors we use for buying stocks: valuation, fundamentals and sentiment. Valuation is monitored through our price targets of downside, fair and full value, and these targets are re-established periodically by our investment team. This is an integral part of our process because as fundamentals change, so can valuation. Therefore, our security management is dynamic and allows price targets to move both up and down to reflect improvement or deterioration in fundamentals. As a stock approaches and/or exceeds our full value target, and we believe fundamentals remain strong, we scale out of positions and may write covered call options* as part of our sell discipline. Fundamentals can also trigger a sale if they do not keep up with valuation. This can happen either because fundamentals deteriorate or because valuations improve. Additionally,
if investor sentiment changes more than fundamentals warrant, then a stock becomes a sell candidate.

*Covered Call Writing is a technique used in implementing our sell discipline. When a security moves between our Fair and Full value range, we may write out-of-the-money covered calls. Normally, less than 10% of the portfolio will be written at any one time. (The use of covered calls does not apply within certain subadvisory programs. )