Tilts; direct equities
We typically manage our direct equity portfolios with a QGARP focus, Quality Growth at a Reasonable Price.
We do so in that order: Quality first, Growth second, Reasonable Price third, by weighting or importance in our process.
You can also see that we factor time around that structural framework. We narrowed our usual underweight to Value enormously over the past year for the first time in 8 years.
We did this because the factor dispersion (below, captured by simple PEs in the growth versus value indices, and the spread or ratio between them in the far right column) is at levels we’ve not seen since the tech wreck.
It is, simply put, pretty crazy, for some of the secular growth, ultra high quality companies out there.
An example would be FPH trading at 50x forward earnings. DMP similarly reached crazy multiples, and is still expensive, even after dropping from $160 to $60.
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Please note that past performance is not a reliable indicator of future performance.
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