We do not fear market complexities; instead, we seek to understand and profit from them. Heard Capital’s investment strategy involves looking beyond individual economic cycles and focusing on capturing secular trends to generate long-term, sustainable returns. Alpha generation is a function of determining the bias embedded in the capital structure while taking into consideration potential catalysts, observing and differentiating between alpha factors from beta factors in order to generate incremental returns in our hedged portfolios.
In identifying undervalued companies, we take a holistic approach, evaluating the quality and long-term profitability of a company’s underlying business, confidence level in management’s ability to execute and ultimately whether the valuation is in line with the company’s growth prospects. We do not use quantitative screens to limit the universe of stocks which we evaluate. Rather, we utilize our domain expertise to identify the best companies whose valuations don’t fully reflect the sustainable competitive advantage of its business.
Risk management is integrated into the investment process and monitored internally and externally. By utilizing an active management approach, we intend to monitor holdings from idea inception to exit. We feel it prudent to have a sell discipline in place, to help remove the emotional element. Each investment thesis and its underlying assumptions are reviewed as market conditions change to achieve both diversification and long-term appreciation potential. When possible, we seek to anticipate market conditions and high probability events.