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Investment Strategy ValueTree's Focused Small-Cap Value Investing strategy is unique from many other investment managers. We manage a concentrated portfolio of 10-12 stocks. We invest in small-cap companies with market valuations below approximately $1 billion. And we conduct intense fundamental research to estimate each company's long-term intrinsic value. Our conservative portfolio management preserves your capital. We only invest in stocks that we believe are trading at significant discounts to our estimate of each company’s long-term intrinsic value. And we will not invest haphazardly, simply for the sake of being "fully invested." We prefer to hold cash when we see few great investment opportunities. The ValueTree Difference We manage a concentrated portfolio of 10-12 stocks. In our opinion, many investors are over-diversified. For example, many mutual funds own more than 100 stocks in a portfolio, and exchange traded funds (ETFs) can own as many as 500 to 2,000 stocks. That means that your total portfolio could own as many as 2,000 to 5,000 stocks or more, if you own multiple funds or ETFs. We think it is impossible to monitor that many companies at one time. holds so many stocks that you represent the entire market? We only invest in companies that we can understand, analyze, and value. In our opinion, many investors own companies that they do not fully understand.
If you cannot UNDERSTAND every line of business in a company, then You cannot isolate its drivers of revenue and costs If you cannot ISOLATE the drivers of revenue and costs, then You cannot analyze a company If you cannot ANALYZE a company, then You cannot value it If you cannot VALUE a company, then You should not invest in it We conduct intense fundamental research. Wall Street often reacts on a day-to-day or quarter-to-quarter basis. However, companies often operate on year-to-year or even decade-to-decade scenarios. We are long-term investors, and we conduct intense fundamental research to estimate a company's long-term intrinsic value. Our research proves that value is created over years, not quarters. Risk Management ValueTree actively manages risk in your portfolio. We will only invest when we see 50% to 75% upside potential over the next 1 to 3 years. We protect your capital against downside risks by selling when new information breaks our initial investment thesis, or when a stock price approaches our estimate of its long-term intrinsic value. ValueTree’s Focused Small-Cap Value Investing strategy seeks to profit from our intense research efforts in only a few carefully selected investments. Portfolio theory suggests that owning between 8 and 16 stocks in a portfolio will provide 80-90% of the total diversification one could achieve by owning the entire stock market. We believe that our model of owning 10-12 companies in a portfolio provides diversification, and does not dilute our best ideas. We only invest in small-cap companies that we can understand, analyze, and value. Our value investing approach has the potential to reduce risk by only investing in stocks with large margins of safety between their stock prices and our estimates of their long-term intrinsic values. |
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