Heard Capital's investment process is anchored in deep, fundamental analysis, utilizing a unit-based approach to evaluate situations and eliminate confirmation bias. The Firm invests in a concentrated and long-term manner with the belief that the Firm’s best ideas should not be diluted. The Funds typically hold 15-20 positions at any given time with an average hold period of five years or more.
Key elements of the Firm’s investment process include:
- Debate-Driven Idea Generation: The Firm’s idea generation process is driven by sector or company-specific debates. The Firm leverages its team’s 15+ years of experience investing in six sectors to analyze actionable debates and identify the company best positioned to address the debate. Debates can stem from a variety of sources, including secular trends or corporate events. The Firm does not run screens or take a relative value, generalist approach.
- Unit-Based Analysis: The Firm analyzes opportunities utilizing a unit-based approach, seeking to understand how value is created within a company. This process allows the Firm to focus on what it believes to be most important and quantify critical vectors within a debate.
- Integrated Risk Management: Risk management is integrated into the Firm’s investment process and occurs at the position and portfolio levels. Risk management begins with security selection and continues throughout the investment horizon. Before capital deployment, the Firm analyzes quantitative and qualitative risks associated with a position and seeks to eliminate confirmation bias. Throughout the investment horizon, the Firm leverages its risk frameworks to manage portfolio and position-level risks.
- Focus on Driving Outcomes: The Firm’s experience and track record allow it to have meaningful dialogues with research analysts, sector specialists and management teams when it deems necessary.
- Emphasis on Expression: The Firm utilizes various instruments to construct the portfolio in an efficient manner and utilizes position sizing to express conviction. Positions and exposures are dynamically monitored and managed throughout the investment horizon.
- Pre-Mortem Analysis: The Firm takes a rigorous, systematic approach to analyzing and understanding its decisions across all aspects of the investment process, including security selection, exposure management, position sizing and position exit. Through the analysis of historical situations, decisions and outcomes, the Firm is able to identify skill and make better informed decisions.