Equity Management

Patriot employs a top-down portfolio management process. The investment approach begins with identifying exposure to each of the ten major economic sectors as defined by Standard & Poors. Relative valuation and performance, as well as regulatory and economic issues, are combined to determine desired exposure to each sector within the S&P 500 Index. Quantitative analysis is also undertaken in order to provide layered portfolio construction. In addition to maintaining desired sector exposures, the overall portfolio is designed to be consistent with our long-term economic outlook.

Individual stock selection is primarily based on the following two criteria: Relative Valuation and Competitive Advantage. After a stock meets the first two criteria, an in-depth analysis of its valuation, earnings prospects, balance sheet, competitive landscape, and potential risks is conducted in order to arrive at an investment thesis. After the Portfolio Managers and analysts have derived and finalized their recommendations, securities are presented to the Investment Committee for final approval. Once a stock is added to the portfolio due to a positive outlook, a strong sell discipline is maintained.

Sell Discipline
Patriot’s sell discipline is guided by several facets. The decision to sell a particular holding may be driven by unique client factors, portfolio sector weightings, client specific requests and overall asset allocation. Stock and bond positions are monitored throughout each trading day. Individual positions are reviewed whenever there are material changes in price, basic fundamentals, Wall Street opinion, company news and company management.

Research
Patriot’s research process is best described as a Mosaic approach. Information data is accumulated through various public and private resources. Once the data is collected, it is assessed and evaluated through a series of proprietary valuation models.

Governance
The Patriot investment process is governed by an Investment Committee. The committee is currently comprised of 9 professionals, including the two founders of Patriot. The financial market experience of the voting members on the committee ranges from 10 to 25 years. Accreditations include, but are not limited to, Chartered Financial Analyst, Certified Financial Planner®, CPAs and MBAs. Purchase and sale information is presented to the Investment Committee on a weekly basis for consideration and vote. Once a security has been added or removed from the Approved List, it is up to each Advisor and their clients to apply the recommendations.

Fixed Income Management

To achieve the stated performance objective within the fixed income asset class, the construction of fixed income portfolios is based primarily on individual client circumstances and needs. Investment decisions are based on but not limited to the following additional criteria:

1. Income needs;
2. Liquidity needs;
3. Tax characteristics (taxable vs. non-taxable);
4. Yield curve levels; and
5. Credit quality.

As with the equity portfolio, fixed income portfolios are constructed by employing a top-down approach. Analysis of current economic data, interest rate, and inflation trends are taken into consideration in the final purchase and sale decisions. The top-down approach also entails formulation of a viewpoint on future interest rates, credit markets, and bond spreads.

Tax-Exempt Fixed Income Securities
Municipal bond portfolios shall be constructed with primarily investment grade rated securities. Other ratings may be applicable in individual client and state circumstances.

Taxable Fixed Income Securities
Taxable bond portfolios shall be constructed with primarily investment grade rated securities. Other ratings may be applicable in individual client circumstances. Specific securities include corporate, treasury and government agency bonds. Additionally, mortgage pass through instruments may be used as warranted.