We want the companies in which you are invested to achieve enduring growth. As part of our clientele, you choose to be an unrelenting owner of securities, with confidence Gaineswood has done its research thoroughly enough to respond to the twists and turns that inevitably occur in stock investing. We believe that if you own high quality growth stocks bought at reasonable prices, the high return on capital enjoyed by such companies over time can be transferred into appreciation for your stock investing account. Our philosophy embodies three elements: growth, quality, and the control of risk.
Growth: Two Avenues of Appreciation
Should we successfully identify companies capable of substantial increases in earnings as we strive to do, your investment management account would likely benefit more than from just tracking the expansion of sales and earnings. Why not own growth companies that over time get recognized increasingly as exceptional, leading to higher valuation?
Quality: Competitive Advantages
Gaineswood's investment management approach judges quality through assessing competitive positioning and the capacity to be highly profitable. Wouldn't you prefer to own firms that have a demonstrable technological, cost, or marketing advantage such that they can gain market share on a multi-year basis, and do so with a superior return on capital?
Quality: Business Model Profitability
Gaineswood believes that firms with a modest base of assets that generate gross margins in excess of 50% are most capable of extraordinary profitability from a stock investing perspective. Habitually we choose companies for you to own whose revenues are a large multiple of the funds they have invested in brick and mortar facilities. We believe that incorporating these measures into our quality overlay improves your wealth management, for we conclude that these building blocks can lead to durability in challenging stock investing environments. Hence our name, Gaineswoodsm
, since weeds have a way of resuming growth even after poisoning, mulching, or being pulled.
Control of Risk: It still exists, but...
Our aim is not to erase correlation with the equity market, as is the fashion of the day at hedge funds, portable alpha portfolio management firms, and other investment management houses. In bear markets for growth stocks Gaineswood accounts have experienced erosion in value. But we do think we can utilize two interesting tools that as an entire cycle plays out may help mitigate the risk that you may have noticed with other wealth management styles.
Risk: Valuation Discipline When We Buy for You
Through Gaineswood's proprietary matrix of value and growth quintiles, our money management process attempts to sift out "obviously" overpriced securities and limit your stock investing to those with reasonable valuation.
Risk: Avoiding the Herd Mentality
Our long-term technical analysis seeks to exploit investor psychology by avoiding patterns that might expose you to losses caused by large unknown changes that can unfold quickly. We believe capital is often blindly attracted to price movement. It can quickly exit if momentum slows to the upside, or pile on to the downside in "falling knife" situations. Our "modified contrarian" technical methodology supports stock investing in "calm seas," well after disaster has struck, and where there is fundamental evidence of renewed growth supportive of a "prosperous voyage" - to borrow from the imagery of the poet Goethe. When we uncover situations where valuation is unreasonable and the competitive dynamics are unfavorable, certain of our accounts may deploy a portion of their capital to selling short, but our investment management bias is strongly long-oriented.
We know you could employ an investment management firm that has a growth, value, or traditional "GARP" philosophy. By choosing our Persistent Growth Investingsm methodology, we believe you are incorporating some of the best aspects of each. While your account is invested aggressively by a portfolio management expert, quality and risk overlays are assiduously applied to contend with unforeseen developments, be they economic or corporate specific. Past performance is not indicative of future results. Nonetheless, for over a decade we have consistently executed our Persistent Growth Investingsm philosophy for stock investing, and we have confidence the common sense of this approach may continue to endure in a world that always seems just a little bit uncertain.