PENCE CHOKE POINT SMA

The Pence Choke Point portfolio seeks long-term growth of capital. It aims to achieve this objective through a portfolio consisting of a minimum allocation of 80% US domestic companies and a maximum of 20% to foreign equities. These companies are relevant to Pence’s investment theme of disruptive technologies and puts consumer behavior at the center of the process.

Pence’s investment process begins with looking at Big Knowable Themes from changing consumer behavior to technological innovations. Pence Choke Point is a growth-oriented portfolio that is focused on investing in high-quality companies with strong growth potential. The portfolio aims to achieve long-term capital appreciation by identifying and investing in companies that demonstrate robust financial health, innovative capabilities, and competitive advantages. The portfolio utilizes between 40 and 60 individual companies.

A Choke Point is a point and place in time where everything must go through to get from where it is to where it wants to be. A certain limited number of companies can dominate the supply chain between human demand and satisfaction.

Standard allocations in this composite are generally up to 90% equity and up to 10% cash.
The portfolio utilizes between 40 and 60 individual companies varying from 1% to 6% weighting with market cap over $10 billion and projected sales over $1 billion.
Minimum 75% of the holdings are $100 billion cap and maximum 25% of the portfolio are with less than $100 billion.

Key Facts

Inception Date

08/31/2018

Cusip

Assets (Millions)

7.2

Morningstar Category

Large Growth

Country Mix	% of Portfolio
United States	94.0%
Non-US	2.4%
Fixed Income	1.7%
Cash	1.9%

Sector Breakdown	% of Portfolio
Information Technology	35.0%
Communication Services	14.8%
Consumer Discretionary	10.3%
Industrials	9.6%
Consumer Staples	10.7%
Health Care	8.8%
Financials	6.8%
Energy	3.0%

Market Capitalization	% of Portfolio
Over $100B	91.8%
Over $50B but under $100B	7.0%
Under $50B	1.2%

Equity Mix	% of Portfolio
Growth	35.0%
Value	14.8%
Blend	10.3%

GROSS RETURNS

As of Q2/2025

TOP INDUSTRIES

Portfolio %

Semiconductors

12.4

Software

9.5

Interactive Media & Services

7.8

Broadline Retail

6.6

Aerospace & Defense

5.8

Other Industries

57.9

TOP HOLDINGS

Name

Portfolio %

Nvidia

4.3

Microsoft

4.1

Alphabet

3.9

Amazon

3.9

Apple

3.8

KEY METRICS

Name

Portfolio Indicated Yield (%)

1.72

Number of Holdings

Weighted Average Mkt Cap ($B)

279

Median Market Cap ($B)

279

PE Ratio

27.33

Forward PE Ratio

22.56

Price/Sales

3.42

Price/Book

7.19

Price/Cash Flow

19.98

Long-term Earnings Growth (%)

11.8

Long-term Sales Growth (%)

8.6

Standard Deviation % (260d)

17.3

Investment Process

Quantitive Analysis

Qualitative Analysis

Portfolio Construction

Risk Management

UNIVERSE

BIG KNOWABLE THEMES

ACTIVE MANAGMENT

NYSE, Nasdaq, ADRs (min 80% US-based)

Current consumer trends (digital, transformation, e-commerce)

40 to 60 Stocks

Periodic Rebalance

Min. Market Cap > $20B

Technological Innovations (AI, Sustainable Energy)

Positions <6% and >1%

Trimming or dollar-cost averaging during volatile times

Min. projected sales > $10B

Geopolitical Events (affecting commodities, defense spending)

Minimum 75% > 100B Cap, Max 25% < 100B cap

Exiting a position during significant change or fundamental factors

Positive projected sales or earnings growth, determined based on each industry

Current Monetary Policy (restrictive or accommodative)

Fixed Income <10% (ETF Only)

Monitoring Market Cycles

Analyst ratings >3.0

Political and Fiscal Policies (taxes and expendature)

International Trades and Barriers to Entry (globalization, tariffs)

Disclosure

The following composite benchmark is used:

90% – S&P 500 INDEX
10% – Bloomberg Aggregate Bond Index

Risks and Considerations: Investing involves risk, including possible loss of principal. Asset allocation and diversification may not protect against market risk, loss of principal or volatility of returns. Actual investment outcomes may vary. There is no guarantee that these investment strategies will work under all market conditions or are suitable for all investors and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market. No representation is being made that any account, product or strategy will or is likely to achieve profits. Consult your tax advisor for possible tax consequences associated with this investment. An investment in this separately managed account should be made with an understanding of the risks associated therewith that includes, but is not limited to:

Dividend Payment Risk: An issuer of a security may be unwilling or unable to pay income on a security. Common stocks do not assure dividend payments and are paid only when declared by an issuer’s board of directors. The amount of any dividend may vary over time.

SMA accounts typically require a minimum investment of $100,000, although the specific minimum account size varies by program and may be subject to change. The manager may waive these minimums based on client type, asset class, pre-existing relationship with client and other factors. For certain accounts, a negotiated minimum annual fee applies. Please consult with your financial professional for applicable minimums.

Check with your financial professional for specific product availability and performance information. This information may change without notice. From time to time, we may close or reopen strategies.
Securities are available through your financial professional. Not FDIC Insured. Not Bank Guaranteed. May Lose Value. For informational purposes only and not a recommendation to purchase or sell any security.

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Strategies

Our investment strategies seek to capitalize on thematic, long-term investment trends built on a close study of human behavior.

Ubiquitous Strategy Finds investment opportunity in stocks of “ubiquitous” companies—those whose services have become part of our daily lives and whose position at the choke point in the supply chain gives them pricing power.

Content Leaders Strategy Seeks above-average capital appreciation by investing in stocks of U.S. companies that are dominant in the media content arena, including television producers, filmmakers, content libraries, broadcast channels and delivery platforms.

Digital World Leaders Strategy Finds mega-platform providers that have the resources to evolve, transform, and acquire as technology advances and consumer demand shifts.

Building America Strategy Invests in stocks of companies that can benefit from “Building America” through infrastructure projects including civil construction and engineering, and the sale of construction materials.

Human Behavior Strategy Focuses on companies that derive the majority of their revenue through sales to U.S. consumers, fulfilling the different levels of human need in a variety of income categories.

PENCE Transformers Index (Ticker: TRFM) Seeks above-average total return by investing in stocks of global companies that benefit from shifts in consumer behavior and technological innovation.

How to invest

Pence Capital Management develops investment strategies for distributors and model portfolios for advisors. To invest in Pence Capital Management Strategies, please contact your broker or advisor.

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