We believe that owning the premier growth stocks is essential to creating wealth. Our objective is to construct a portfolio that has above average growth prospects. We believe that owning companies with above average expected growth rates alone does not work, however, the best performing stocks almost always have the fastest growth and the key is to differentiate between the two. Highly valued companies on average, but the best growth stocks are almost always highly valued. We look for “significant change” which drives sustainable growth.
We do not follow the traditional strategy of owning the largest growth stocks simply because they are in the Index. Many of these companies have already experienced rapid growth and the likelihood of continuing this growth is questionable. For that reason, we de-emphasize the mega-cap companies and focus on stock opportunities that have greater growth potential. We are looking for the next Starbucks before it is recognized. A portion of our large cap growth portfolio is dedicated to buying the stocks that we believe are in the early stages of their growth lifecycles.
Our approach to large cap growth investing is different because:
- We own companies and do not closet index
- Our methods are focused, differentiated, and continuously improving
- We know our major risks
- We use tools that work well and we reject old standbys – PEG and ER
- Our research focus is on long-term business dynamics, not quarters