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Our Process

The James philosophy is to grow clients’ funds while stressing the preservation of capital. The goal is to minimize downside risk without limiting upside potential. Our proprietary ranking system, alongside continuing research, helps us to achieve desired results in client portfolios.

"By re-evaluating everything we do on an ongoing basis, we continually keep ourselves fresh, and that’s one of the reasons we’ve been able to stick around for 40 plus years." - Barry James, President

Overview

Weekly Market Risk Reports

Report Prepared Each Weekend For Over 40 Years
Developed Over 100 Proprietary Stock And Bond Market Risk Indicators
Strive To Look Beyond The “Wisdom Of Wall Street”
Revalidate All Indicators Every Other Year

Risk Filtration

The James Proprietary Ranking System

Time Tested System Looking at 415 Data Items Since 1986
Ranks Stocks On Relative Attractiveness
Scale From 1 to 100, 1 Equals The Best Expected Bargain
Review Results Monthly

Continuing Research

Revalidate Ranking System Every Two Years
Review Monthly Model Performance
Compare Growth Versus Value
Sector Performance
Review Market Capitalizations

Research

At its broadest terms the research performed by James Investment has two primary purposes, to identify the risk levels of the stock and bond markets and to choose what we feel are the best available securities.

Each year a major effort is placed on discerning the long-term path of the economy, stocks, bonds, and international markets. This provides guidance in determining whether markets are giving us opportunities to buy or sell or whether a recent movement in the market is simply fool’s gold.

The risk levels of the market are assessed every weekend with the help of James validated market risk indicators. Presently, we have over 100 separate market risk indicators. Each indicator is classified as favorable, neutral, or unfavorable. While no single indicator is deemed to be perfect, it is normal for the summation of the indicators to provide guidance for the future.

Likewise, James Investment is also concerned about individual stock selection. We continue to develop, research, and test our stock selection model. This quantitative model is used to provide guidance on an individual stock’s potential. We have found that this ranking system recognizes attractive buy candidates. Perhaps its best value is found in our sell discipline. If a stock ranks poorly in our ranking system, the security will be reviewed by the investment committee for possible sale.

Quantitative Inputs

Valuation

1. Fundamentals

Price/Earnings
Price/Book
Price/Cash

2. Neglect

# of Analysts by Market Cap
Analysts' Long Term Projections (Contrary)
Institutional Ownership

3. Management

Change in Shares Outstanding
Insider Trades
Management Holdings

Earnings

Return on Assets
Earnings Momentum
Quarterly Surprise

Strength

Relative Price Performance
Larger Time Period
Compared With All Stocks

Equity Buy Guidelines

Appropriate Size

Small/Mid/Large
Typically $250M And Above

Sector Selection

Top Down Economic Analysis
Bottom Up Model Sector Ranks
Optimized Historical Sector Weights

Individual Stock Analysis

Income Statement
Balance Sheet
Fundamentals
Earnings
Price Chart
Major Developments
Insider Ownership
Shares Available
Trading Volume
Strong Ranking/Strength Based On JIR Analysis

Investment Committee Approval

Presentation
Voting
Most Junior Member Votes First
Majority Vote

Portfolio Team Purchase

Liquidity Review When Purchasing Small Cap
Monitor Chart Pattern

Trader

Humans Add Value To Process

Equity Sell Guidelines

Decline in Rank

Sector Diversification

Diverge From James' Tolerances

Significant Market News/Activity

Individual Stock Analysis

Income Statement
Balance Sheet
Fundamentals
Earnings
Price Chart
Major Developments
Insider Ownership
Shares Available
Trading Volume

Investment Committee Approval

Presentation
Voting
Most Junior Member Votes First

Sell

Work Trade With Current Price Action And Size Of Position

Trim

Consider Trimming If Position Grows To Over 8% Of Portfolio

Bloomberg Barclays U.S. Aggregate Government/Credit Bond Index*	An unmanaged index generally representative of dollar denominated U.S. Treasuries, government related and investment grade U.S. corporate securities that have a remaining maturity greater than one year.
Beta	A measure of a stock's volatility in relation to the overall market.
Dividend Yield	Expressed as a percentage, is a financial ratio that shows how much a company pays out in dividends each year relative to its stock price.
Down-Market Capture Ratio	A statistical measure of an investment manager's overall performance in down-markets. The ratio is calculated by dividing the manager's returns by the returns of the index during the down-market and multiplying that factor by 100.
Price/Book Ratio	A ratio used to compare a stock's market value to its book value. It is calculated by dividing by dividing the current closing price of the stock by the latest quarter's book value per share.
Price/Earnings Ratio	A valuation of a company's current share price compared to its per-share earnings.
R-squared (R²)	A statistical measure that represents the proportion of the variance for a dependent variable that's explained by an independent variable or variables in a regression model.
Russell 1000® Index*	The Russell 1000® Index, a subset of the Russell 3000® Index, represents the 1000 top companies by market capitalization in the United States.
Russell 2000® Index*	An index measuring the performance of approximately 2,000 smallest-cap American companies in the Russell 3000® Index, which is made up of 3,000 of the largest U.S. stocks.
Russell 2000® Value Index*	Refers to a composite of small cap companies located in the United States that also exhibit a value probability.
Russell 3000® Index*	The Russell 3000® Index is a market-capitalization-weighted equity index maintained by FTSE Russell that provides exposure to the entire U.S. stock market.
Russell Microcap® Index*	The Russell Microcap Index is a capitalization-weighted index of almost 1,550 small cap and micro cap stocks that captures the smallest 1,000 companies in the Russell 2000, plus 1,000 smaller U.S.-based listed stocks.
Sharpe Ratio	Measures the performance of an investment compared to a risk-free asset, after adjusting for its risk. It is defined as the difference between the returns of the investment and the risk-free return, divided by the standard deviation of the investment.
Standard Deviation	In statistics, the standard deviation is a measure of the amount of variation or dispersion of a set of values.
Up-Market Capture Ratio	The statistical measure of an investment manager's overall performance in up-markets. The ratio is calculated by dividing the manager's returns by the returns of the index during the up-market and multiplying that factor by 100.
Weighted Average Market Capitalization	A type of stock market index construction that is based on the market capitalization of the index's constituent stocks.
	*indexes are not managed, one cannot invest directly in an index

Our Process

Overview

Weekly Market Risk Reports

Risk Filtration

The James Proprietary Ranking System

Continuing Research

Research

Quantitative Inputs

Valuation

1. Fundamentals

2. Neglect

3. Management

Earnings

Strength

Equity Buy Guidelines

Appropriate Size

Sector Selection

Individual Stock Analysis

Investment Committee Approval

Portfolio Team Purchase

Trader

Equity Sell Guidelines

Decline in Rank

Sector Diversification

Significant Market News/Activity

Individual Stock Analysis

Investment Committee Approval

Sell

Trim

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