Heard Capital's investment process is anchored in deep, fundamental analysis, utilizing a unit-based approach to evaluating situations and seeking to eliminate confirmation basis.
We target misunderstood situations within our six sectors of focus and evaluate opportunities through a credit lens, focusing on downside risks, and with a long-term perspective. The Funds are concentrated in 15-20 long positions, with the belief that our best ideas should not be diluted. Positions are typically held for five years or more.
Key elements of our investment process include:
- Debate-driven idea generation process: Idea generation generally begins with a sector-specific debate, such as the impact of new technology or potential changes in demand. We then leverage our domain expertise to dissect the key issues and invest in the company that we believe best addresses the debate. The Firm does not run screens; instead it utilizes its domain expertise to identify opportunities misunderstood by the generalist community.
- Intense focus on the incremental: Given our 15+ years of experience investing within the same six sectors, we are able to focus our analysis on what we believe to be most important. We seek to understand and quantify critical elements of the debate that others may miss due to lack of experience or expertise. We believe this focus creates a differentiated and actionable view.
- Understanding of the implications: Our unit-based approach provides a framework to understand the various implications of a debate. Through our analysis, we seek to identify the company that should be the greatest beneficiary of the debate over the near and medium term.
- Focus on expression: We are deliberate about how we establish positions and allocate capital. We utilize size to express conviction and instrument type for efficiency. We actively monitor and dynamically manage positions throughout the investment horizon.
- Driving outcomes: The Firm has been successful in driving outcomes for its positions by actively engaging with the investment community when it deems necessary. The Firm’s extensive experience and track record allow it to have meaningful dialogues with research analysts, sector specialists and management teams, as appropriate.
- Strategic data analysis: We take a rigorous, systematic approach to analyzing and understanding our decisions throughout the investment process, including security selection, sell decisions, exposure management, expression and position sizing. Analysis of historical situations, decisions and results allows us to identify skill and make better informed decisions going forward.