Within the Grace Wang Portfolio Management Practice, we employ a number of investment strategies to add value to client portfolios:
1. Secular growth themes: It has been shown that companies capitalizing on large growth themes can sustain their earnings for a longer period of time, and hence, sport a higher valuation than many investors may initially expect. Excellent examples would be cloud computing and healthcare analytics, where the initial incumbents who built scale and invested in their businesses were rewarded a decade later very handsomely. If we can identify a handful of secular growth themes that will prevail over the next decade, we believe the companies that are investing in these themes will be the long term winners.
2. Small and mid-cap growth: Small and mid-cap growth stocks ranging between the $2.5 billion to $10 billion market capitalization have the advantage of a sufficient record for us to be comfortable in investing, while being small and nimble enough for their valuations to still remain under recognized by mainstream investors. Our belief is that a handful of these stocks, held over the long term, can make a meaningful difference in client portfolio returns.
3. Using market dislocations to add value: Two market dislocations - the trade wars of 2018/2019 and the pandemic of 2020 - allowed opportunities for us to add to already strong companies and initiate new positions. By “being fearful when others are greedy, and greedy when others are fearful,” (Warren Buffett) we can enhance our returns coming out of uncertain times.