Investment Process

Investment Process

The following three tenets describe our approach to the investment process: focused, tactical, and growth-oriented.


1. Focused. We run a concentrated portfolio and commit substantial percentages of capital when we think the risk/reward characteristics are in our favor. We believe excessive investment diversification can only lead to average, market performance. (After fees, excessive diversification will lead to index or market underperformance.)


2. Tactical. Risk can sometimes be mitigated and superior performance (i.e. alpha) may be achieved by varying market and asset class exposure. Therefore, we continually adjust overall market exposure (i.e. beta) based on valuations and market sentiment. Client accounts vary from 50% to 150% long exposure to the equity markets and non-US Treasury bonds (i.e bonds with "credit" risk). We believe broad equity market exposure performs poorly when valuations are high and market sentiment is poor (and vice versa). The same is true for all asset classes.


3. Growth-Oriented. The objective of our strategy is capital appreciation. However, this does not mean we are only focused on achieving capital gains. Coupons and dividends are perfectly acceptable forms of investment returns. That being said, the strategy is geared to protecting and growing capital, not generating income.