About Longbow Asset Management
About the Longbow Approach to Investing
About Your Longbow Account
Operations Information
About Longbow Asset Management
What types of accounts does Longbow manage?
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What kinds of securities does Longbow buy for client portfolios?
The client authorizes the firm at its discretion to use cash deposits to invest in the following:
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Is Longbow a registered investment advisory firm?
Yes, Longbow Asset Management is registered with the U.S. Securities and Exchange Commission and the Oklahoma Department of Securities.
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Does Longbow act as custodian for my account(s) or have access to my funds?
No. Longbow does not act as custodian for any client accounts. Longbow's primary custodian and broker/dealer is Charles Schwab and Co., Inc.; other custodians and broker/dealer firms include Bank of Oklahoma, Jefferies and Co., Scottrade, and Smith Barney.
As an independent investment advisory firm, Longbow is able to work with practically any financial institution acting as custodian for a client’s account. Furthermore, as the investment adviser of a client’s account(s), Longbow is only granted a Limited Power of Attorney to execute buy and sell orders on behalf of the client and is not able to withdraw funds from client accounts (unlike a Full Power of Attorney).
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In what ways are Longbow’s investment advisers different from stockbrokers?
Unlike most brokerage firms, Longbow does not sell products, such as annuities, financial plans, life insurance, or mutual funds.
Furthermore, we are not paid commissions for buy and sell orders placed in a client’s account.
We have a simple, straightforward annual fee. Our management fee is calculated quarterly and based on the market value of assets that we manage for our clients.
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Why should I hire Longbow instead of simply buying a mutual fund?
There are several compelling reasons to retain Longbow as an investment advisory firm.
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About the Longbow Approach to Investing
What is Longbow’s approach to equity investing?
Our equity selection process is deeply rooted in academic finance, specifically Modern Portfolio Theory. We employ portfolio optimization – a mathematical technique – to form efficient portfolios. An efficient portfolio maximizes the benefits (return) and simultaneously minimizes the consequences (risk). Clearly, each is related and neither should be viewed in isolation. Risk and return must be measured on an aggregate basis and controlled at the portfolio, not security, level.
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Is a mathematical technique all you use?
No. Ultimately, humans not computers make the final decisions. Longbow’s principals add value because they possess both information and crucial analytical skills that a computer does not. Advantages of using portfolio optimization are that the process limits emotions from overly influencing the investment decision-making process, and it systematic, definable, and transparent.
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Is portfolio optimization new?
No. In fact, it dates to 1952 when Harry Markowitz, a 25-year-old graduate student at the University of Chicago, published “Portfolio Selection” in the Journal of Finance. His early work formed the basis of what became known as Modern Portfolio Theory. This body of knowledge has been expanded, refined, and tested by academics and practitioners for the last 50 years.
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Is portfolio optimization a high turnover strategy?
No. The principle underlying portfolio optimization is diversification, which reduces risk. Intuitively, people understand and accept this concept. Consider the familiar admonition: “Don’t put all your eggs in one basket.” Portfolio optimization simply confirms that admonition, mathematically indicating what intuition suggests. The result is a well-diversified portfolio designed to allow its distinct elements to work together as a unit. When done properly, the portfolio does not require frequent rebalancing.
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Why does diversification reduce risk?
Diversification means owning securities that respond differently, and ideally, oppositely to a common event. News continually enters the market and securities constantly react both positively and negatively. Because the future is unknowable and cannot be predicted reliably, the safest course is to dampen the overall level of risk by holding multiple securities whose movements cancel each other out.
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Does portfolio optimization make my portfolio risk free?
No. A certain level of risk, called market risk, is inherent to investment and cannot be eliminated, even through broad diversification.
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What does it mean to be “risk averse?”
Longbow’s management style ensures that clients act in a risk-averse manner. To understand the term “risk averse,” consider the following question: Given the choice between (a) receiving a guaranteed $50; or (b) playing a 50-50 gamble with a payoff of $0 if you lose and $100 if you win, what would you choose?
Those who choose the guaranteed $50 are risk averse; those who choose the 50-50 gamble are risk seeking. While both options have the same expected value of $50, the guaranteed option has less variance (or risk) than the gamble. Therefore, the guaranteed money is the superior (risk averse) choice.
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My account has unique restrictions. Is portfolio optimization still appropriate?
Yes. The unique restrictions of a client’s account represent the constraints or parameters Longbow establishes and in which the investment model must operate. The rules that Longbow is able to set are varied and powerful. These may include limiting exposure to certain sectors, prohibiting the purchase of specific securities, requiring certain securities to be included or held at their current weighting, etc.
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Does Longbow offer only one style of equity management, for example large cap?
No. A central strength of the Longbow management style is that it is a well-defined process — one that may be applied with equal effectiveness to many portfolio styles. Simply by changing the securities that the portfolio optimizer uses as inputs, Longbow can alter the style of the resulting portfolio. It is just as easy to input small cap securities as it is large caps. In addition, a value or growth portfolio can be created by first screening the universe of securities by these characteristics and using this as the underlying population analyzed by the optimizer.
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About Your Longbow Account
Longbow is a “fees only” adviser. The annual investment advisory fee is 1.0 percent for equities and 0.5 percent for fixed income. An asset management fee is calculated quarterly and based on the market value of assets that are managed for clients.
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What is Longbow’s minimum client mandate?
Longbow’s minimum client mandate is $250,000.00. This mandate may comprise the market value of one account or the combined market value of several accounts for a client.
A minimum annual fee may be imposed for mandates of less than $250,000. (The minimum annual fee is $2500 for equities and $1250 for fixed income.)
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Longbow calculates the portfolio’s asset management fee using market values on the last day of every calendar quarter as determined by the portfolio’s custodian or a third party pricing service such as Bloomberg L.P., Dow Jones, or Yahoo Finance.
The client may remit payment by personal check or authorize the custodian to make quarterly asset management fee payments to the firm by electronic funds transfer (EFT) or other means, in which case a copy of the quarterly fee statement will be sent to the custodian in addition to the client.
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When considering hiring Longbow as my investment adviser, does it matter where my account is currently being held?
No, Longbow can manage a client’s investment portfolio at practically any financial institution or broker dealer by executing a Limited Power of Attorney agreement which will grant Longbow investment authority and other powers necessary to carry out its advisory duties for a client’s portfolio.
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How does Longbow communicate with me about my account?
Longbow’s client commitment demands clear and effective communication at each stage of the investment process, from explaining the investment approach to reporting the results. A transparent investment process coupled with a transparent reporting process builds confidence, trust, and safeguards the client relationship — Longbow’s first priority.
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How do I open an account with Longbow?
Simply call 918-295-9929 to schedule a meeting to discuss your investment goals and Longbow’s investment strategies, and to complete the necessary paperwork to open an account or transfer existing accounts to Longbow’s management.
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Operations Information
What are your hours of operation?
Longbow is open Monday through Friday from 8:00 A.M. to 5:00 P.M. CST. Longbow representatives are available by appointment to meet with clients or prospective clients outside of normal hours of operation including weekends.
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Longbow is located in the exquisite Mid-Continent Tower at 401 South Boston Avenue in downtown Tulsa, Oklahoma (located on the northwest corner at the intersection of Boston Avenue and 4th Street).
Our office is located on the ground floor of the building in Suite 100 in an elevated section northwest of the main lobby near Jackie's Deli and The Journal Record. (Additionally, the most notable landmark directly in front of the entrance to our office is a bronze sculpture, created by long-time Tulsa artist Jay O'Meilia, of two roughnecks tirelessly working on an oil rig.)
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Our guests can always enjoy complimentary valet parking in the Mid-Continent Auto Park (enter from 4th Street heading east between Boston and Cincinnati Avenue). Additionally, there is usually ample parking along the streets near the Mid-Continent Tower— Boston Avenue, Cincinnati Avenue and 4th Street—and in the American Parking Garage (enter from Boulder Avenue between 4th and 5th Street). Feel free to call our office prior to a meeting to make parking arrangements.
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