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	"Because ACM tries to buy growth cheap, we are not comfortable buying into stocks that have already been swept along by the crowd and popular convention because of the losses that occur when these bubbles burst." Dr. Charles Lieberman Chief Investment Officer Advisors Capital Management, LLC				Advisors Capital Management Investment Philosophy Advisors Capital Management's (ACM) distinctive style is first and foremost driven by value, broadly defined. We are attracted to securities that, in our judgment, offer higher than average prospective returns that are not currently reflected in the stock price. Many such investments require patience for the investment merits of these companies to emerge. Thus, our approach inherently takes some time and many positions are initiated with an investment horizon of one to three years. Other value managers typically define value in a classic Graham-Dodd fashion, which is based strictly on balance sheets and income statements. ACM's approach is somewhat broader than that because a company's growth prospects are often not evident from a balance sheet. Indeed, just as assets can be undervalued, growth prospects can also go unappreciated. So, we might find securities attractive that do not fully reflect the growth opportunities inherent in the business. At times, this makes our investment style somewhat contrarian. Because we try to buy growth cheap, we are not comfortable buying into stocks that have already been swept along by the crowd and popular convention because of the losses that occur when these bubbles burst. Our Chief Investment Officer Dr. Lieberman, is value oriented and does not join in momentum driven investments simply because they are the latest hot sector in the market. Indeed, such investments tend to become the most overpriced during market rallies and vulnerable during market declines. But when the market gets infatuated over some particular sector, other sectors may languish at cheap prices from their lack of attention. This often creates very attractive entry points for investments that are out of the financial limelight but are, nevertheless, highly attractive. Dr. Lieberman also tries to exploit his economics expertise. Top down factors, such as the business cycle, interest rate outlook, demographics, and other macro variables are used, when possible, to identify industries or sectors of interest. While top-down considerations are invaluable for targeting areas for further analysis, individual investments are fundamentally a bottom-up process. Once a sector has been identified as enjoying attractive growth characteristics, an evaluation is performed on the investment merits of the individual companies within this sector and its securities. Strong growth prospects may already be widely understood and fully reflected in securities prices, which may undercut or eliminate any interest in the sector. Moreover, the attractiveness of an industry will depend on the varied investment merits of the individual companies under consideration, including their competitive position within their industry, balance sheets, cost structure, their unique growth opportunities, as well as numerous other factors. These bottom-up company specific factors are critical in the investment process, even when attention is drawn to an industry by top-down macro considerations. Special situations are an area of great interest and a reflection that investing is inherently a bottom up process. Examples of special situations include spin-offs of divisions of larger companies that have no independent prior history, corporate restructuring, new technologies, and strategic merger combinations and industry consolidations due to deregulation. Such situations are often under appreciated by the market because the absence of an independent operating history makes the outlook for the new entity somewhat more uncertain. Such situations are enticing, if it is possible to make some judgment about the prospects for the company as a self-standing operating business. Each special situation is unique, almost by definition, but potentially attractive only if Dr. Lieberman can become comfortable with the business opportunity. Diversification is very important for risk management. By spreading risk across a number of securities, industries, and even strategies, the manager can reduce the volatility of investment returns. Even when finding a particular investment idea exceptionally attractive, and possibly concentrating some investment in that narrow area, ACM will still diversify more broadly to spread the risk.

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