Our Philosophy
As an investment counsel firm, we tailor investment programs to our clients' personal objectives, taking into account such factors as family, age, income, risk tolerance, and taxes. We are primarily long-term investors,
seeking to preserve and grow clients' capital over time. We believe that for the long-term investor equity securities are the investment of choice, but we recognize that bonds or cash equivalents may be better suited in certain circumstances. Therefore, we also offer advice on most securities commonly held in U.S. Investment accounts: domestic and foreign common and preferred stocks; government, corporate and municipal bonds; mutual funds; convertible securities; warrants; exchange-traded option contracts;
and partnership interests.

Our normal investment horizon is one to four years. The annual portfolio turnover in the portfolios we manage rarely exceeds 30%. We occasionally use stock and index options, but normally do not engage in short-term trading, short sales or margin transactions. We believe that clients can obtain sufficient diversification with fifteen to thirty stocks, and, as a rule, portfolios are not loaded with a large number of names.

In making investments, we are value-oriented; we are reluctant to pay a premium for a stock and endeavor to buy stocks when they are out of favor with the market. We try not to chase “fad” stocks or fashionable investment trends. We seek companies that represent high quality operations, with large free cash flows, sustainable growth rates, increasing dividends, and low price volatility. We favor companies in which management has a considerable stake, and often sell those issues and industries in which the insiders are liquidating.

We specialize in the needs of Islamic investors; our first and largest client is the Amana Mutual Funds Trust. We advocate ethical investing, believing that companies with effective corporate responsibility policies are better positioned to avoid crises that could lead to reputation damage, higher costs, lost production, and fraudulent operations. We favor companies with stable earnings and strong balance sheets free of excessive debt.

Because we are moderately risk-averse, our performance may trail the averages in rising markets, as we seek to minimize losses during falling markets. When possible, we try to capitalize on the advantages of our
location and heritage. We place substantial emphasis on non-U.S. equity investments.

We believe the largest stocks are so widely researched and traded, they rarely present opportunities for uncovering hidden value. We believe that values more often may be found among the smaller second and third Tier companies. Analytical responsibility is divided among our investment staff by sectors and industries. Portfolio managers select issues from our “recommended list” which we limit to approximately 200 equities.

In fixed-income accounts, we try to reduce risk by focusing on quality and income. When a client’s objective is income, we generally use higher quality short- to medium-term bonds, either taxable or tax-exempt, and high-yield
equities.

Saturna gathers investment information from many sources, with the Internet and Bloomberg being the most used. We maintain our own research files on hundreds of actively followed companies and mutual funds. Our analysts regularly read numerous financial and market publications, and also review securities and markets with independent analytical services. In contrast to some advisory firms, we do not use clients' brokerage
commissions to pay for research or other services, a practice known by the euphemism “soft dollars.”