Shikiar: Our Investment Philosophy

Preferred equities and corporate bonds represent attractive opportunities for conservative clients.

The tentative nature of the worldwide economy and securities markets in late 2008 and early 2009 led our investment professionals to move up the capital structure in the interest of reducing portfolio risk, while attempting to capitalize on what our team believed were undervalued securities. Market dislocations at the time caused several relatively conservative investments to be mispriced. A combination of thorough due diligence and very good timing allowed our investment professionals to establish positions for clients at very attractive levels in the preferred equities and corporate bonds of the companies whose equities we had been researching and knew very well. The firm’s primary criteria for investing in a company’s stock, namely strong cash flow generation and successful management, allowed us to quickly gain comfort in those particular companies’ bonds and/or preferred equities. As a result, we were able to reduce risk in client portfolios while capturing significant market upside. Preferred equities and corporate bonds represent attractive opportunities for conservative clients, and our investment team continues to apply this investment strategy for clients.

In sum, our investment philosophy that companies with strong cash flow generation and above average, seasoned management teams, allowed us to diversify across several asset classes since 2008. Through a combination of bonds, preferred equities and common stock, Shikiar attempts to provide our clients with above-market returns, with much less investment risk than an equity-only portfolio.

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