Hammer Asset Management, LLC, founded in 1990, is an active quantitative/fundamental manager based in Auburn, California using high-quality securities to attain our goal of high risk-adjusted returns relative to the market. The investment philosophy driving research is a disciplined and systematic analysis of a road set of macro-economic conditions, as well as the fundamentals of individual investments within our universe. The investment process is model-based, providing the benefit of consistency in the timely analysis of tremendous amounts of data. We believe clean data and sound algorithms are critical in delivering repeatable results. Our additional edge is the measurement and proprietary use of investor sentiment in our return forecasts culminating in a strict, risk-based approach to portfolio construction.
Our company is registered with the Securities and Exchange Commission under the Investment Advisors Act of 1940. Our clients include corporations and corporate retirement plans of all sizes as well as individual trust, retirement, and taxable accounts. We act in an advisory capacity only and do not retain custody of any cash, securities, or other client assets. We are compensated through a quarterly management fee, which is a function of the amount of assets in the account.
PHILOSOPHY AND STYLE
We believe a portfolio’s asset allocation (the percentage invested in equities versus bonds or cash) is a major determinant of both performance and risk (volatility). Therefore, each of our clients has his or her own particular asset mix, depending on the investor’s particular time-horizon, risk profile, and investment objective. Hammer Asset Management offers a proprietary method of asset allocation whereby the portfolio’s asset mix is periodically adjusted to reflect the current probabilities of stocks, bonds, and cash outperforming each other over the client’s time-horizon. A second method of asset allocation is one where the client specifies a minimum required return (with a specific probability) over a specific time-horizon. A third method is immunization whereby we continually match the duration of a client’s assets with the duration of its liabilities.
Our equities selection process is a value-oriented, state-of-the-art, quantitative/fundamental/technical system. It includes several fundamental valuation methods, as well as technical and fundamental factor analysis, evaluation of actual earnings momentum and estimated earnings momentum, the use of tools to relate sector positioning to current economic factors and a cross-correlation program to maximize diversification. Generally, we own high quality stocks that are good values (including growth stocks) and have improving fundamentals. Our bond selection system is driven by a proprietary forward-rate model that utilizes only factual data inputs. We invest principally in the U.S. government and agency issues along with some A-rated (or better) corporate debt. Bond selection is a function of expected return relative to expected risk (including reinvestment risk).
We believe discipline is the key to superior performance and meeting the clients’ goals and objectives within the appropriate risk parameters. We maintain a strong buy/sell discipline and are not influenced by fads or the prevalent market sentiment. We are long-term investors, who believe by owning securities and classes of securities which offer well above-average expected returns relative to their respective risk factors, that the short-term performance will take care of itself.