PORTFOLIO MANAGEMENT
How We Approach Investing Matters In The Long Run
Informed Active Management
In our view, active, tactical investment management is superior to passive investment management over the long run. Investing is seasonal. Not every type of investment performs well in every type of market environment. One needs only to look at the multiple bull and bear market moves in stocks and bonds over the past few years to see that.
For this reason, we believe investors are advantaged when they are in control of what they’re invested in, how they’re invested in it, and when they own it.
OUR APPROACH
Owning Well-Run, World Class Businesses
DURABILITY
Durable franchises with long runways for growth
We focus on owning enduring companies in growing industries that we feel confident will be bigger, more profitable enterprises a decade from now than they are today.
Profit Margins
Healthy Profit Margins
To be sure, even the most stable businesses can have periods in which profits are harder to come by. But when measured over a full economic cycle, companies with above-average profit margins tend to have superior business models and harder-to-replicate competitive advantages.
ROI
High Returns on Investment
All else equal, we favor investing in companies that can generate excellent returns on their capital simply by investing in and growing their core businesses. Time and again, we’ve found that as owners of such businesses, we too, can generate excellent returns on investment.
Management Teams
Run By Talented, Trusted Management Teams With Skin In The Game
In our studies, all three of these management traits correlate to better outcomes for shareholders. We look to invest in leaders who do the smart things, do the right things, and do both because their incentives are closely aligned with ours.
Valuation
When They Trade At A Reasonable Valuation
Valuation matters. Just ask anyone who bought high-flying tech stocks during the internet bubble of 2000 or the more recent Fed-induced tech bubble of 2021. We want to own world-class businesses, but only when they trade at a fair price relative to intrinsic value.
OUR CLIENTS
The Way We Invest Starts And Ends With You
We want to understand your investment objectives and unique financial situation and then create a tailored, holistic investment plan that makes the most sense for you.
This includes understanding not only your investment goals – for instance, are you primarily looking to grow your capital, protect it, or generate consistent income? – but also getting to know other factors that will impact how we invest including your tolerance for risk and your investment time horizon.
SAM + Your Personal Financial Outlook
It’s important to know how the capital you have invested with SAM fits into your broader personal financial outlook.
What other assets and liabilities make up your family’s balance sheet? And what are the main revenues and expenses that drive your current and future income statement? This can be extremely helpful in constructing the investment program that best helps you reach your investment objectives.
SAM + Your Personal Financial Outlook
It’s important to know how the capital you have invested with SAM fits into your broader personal financial outlook.
What other assets and liabilities make up your family’s balance sheet? And what are the main revenues and expenses that drive your current and future income statement? This can be extremely helpful in constructing the investment program that best helps you reach your investment objectives.
Advantaged Investors
How, What, and When
How: Finding Balance
When building portfolios for our clients, we look to strike the right balance between diversification and concentration.
We want our portfolios to have an appropriately broad mix of industries, asset classes, and risk/reward factors. But at the same time, we do not want to be so widely invested that our best ideas can’t have a meaningful positive contribution to performance.
What: All Asset Classes
We at SAM find ourselves in opposition to advisors who allocate heavily to passively managed, broad-market index funds and ETFs. Rather, we believe you shouldn’t be invested in all asset classes, all of the time.
When: Using Selective Timing
We see far too many investors and advisors who feel they must be 100% fully invested all the time.
At times of heightened uncertainty and market risk, we think it’s not only prudent, but also profitable to reduce your investment exposure levels. This will better protect our assets when markets do inevitably sell off. And it will enable us to be opportunistic and selectively buy world class assets when others are panic selling.
Frequently Asked Questions
SAM has been managing client accounts since 2016.
SAM’s client-centric approach benefits their clients in several ways.
Firstly, this approach ensures a personalized and tailored investment strategy that aligns with the individual needs and goals of each client. This approach also fosters a strong relationship built on trust and transparency, as SAM actively listens to their clients’ concerns and preferences.
Furthermore, by placing the clients’ interests first, SAM aims to maximize returns while minimizing risks, providing a comprehensive wealth management solution that ultimately enhances their clients’ financial well-being.
SAM believes in constructing simple, relatively concentrated portfolios that generally consist of 30 – 40 positions. We believe that significantly larger portfolios can be unnecessarily complex and dilute the impact of our best ideas. We seek to construct portfolios that will be resilient to different economic and market outcomes.
To paraphrase Warren Buffett, the first rule of investing is don’t lose money, and the second rule is don’t forget rule number one. SAM takes capital preservation as a paramount priority. We believe stop losses – and more specifically, volatility-adjusted, trailing stop losses – are generally a very useful risk management tool to preserve capital. TradeStops® is one of the tools in our risk management arsenal.
The minimum investment amount is $500,000.
Yes, SAM clients can use multiple accounts and account types (IRA, Individual, Trust, etc.) to reach the $500,000 investment minimum – for example, a client could hire us to manage a $300,000 ordinary investment account and a $200,000 IRA account.
In almost all cases it is not necessary for you to sell any existing positions. We aim to make the process of hiring SAM as easy as possible, and that includes handling your existing positions. When you move securities into a SAM managed account, we will immediately conduct a thorough review of the positions. We will hold, resize, or sell those positions based on a number of factors including your chosen strategy, tax implications, and investment preferences.
As a client, you never send cash or securities to SAM. We work with trusted third-party custodians that have Securities Investor Protection Corporation (SIPC) coverage, plus additional insurance in excess of SIPC limits. We purposefully selected custodians that weren’t involved in the subprime mortgage scandals that caused other banks to require government bailouts to survive. SAM clients receive monthly statements from their custodian, and have 24/7 online access so you can see all of your investments in real time. For investors with IRA accounts, your custodian will calculate your required minimum distribution (RMD) at the beginning of every year.
SAM is an active manager seeking investment opportunities across a number of categories, not just stocks and bonds. We offer multiple strategies for growth, income and capital preservation. SAM doesn’t use mutual funds, which we find to be tax inefficient and lacking in personalization, among other faults. In addition to our core portfolios, we offer private investment opportunities to provide our clients with greater diversification and alternative ways to generate income.