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GSCM generally has no boundaries that restrict our investments. We believe if an investment manager is truly value-added then he/she should have the freedom to invest in the best possible asset. Unlike most mutual funds, we are not limited to any particular style, country, or market capitalization. It is our belief that confining a talented investment manager may limit potential returns.
Rather than classifying ourselves as “Contrarian Investors” we prefer “Independent.” For many years, we have often benefited from doing the opposite of the common investor. We prefer to come to our own conclusions, regardless of what others think. Thus, our style is not always contrarian, but rather independent because our own thoughts are free to agree or disagree with the market consensus.
We aim to hold stocks an average of 5-10 years to attempt to reap long-term benefits. By nature, we are patient investors and are generally not affected by emotions. We attempt to give our management teams time to grow their companies. In the short-term, we believe the market is very efficient at processing information. However, it is much more difficult for people to make accurate long-term predictions about the future of a company. Therefore, we believe the market is less accurate at long-term forecasting and that superior returns can potentially be achieved by sticking with successful companies that continually impress investors with sustained earnings growth. On a similar note, we believe we are able to potentially capitalize on long-term themes that the market may take many years to fully digest.
Concurrent with our long-term holding period, we have very low turnover. Over the last 5 years, annual turnover has averaged less than 20%. We do not have the manpower to find which companies are going to surprise investors in the next quarter, but we have been successful at finding companies that have surprised investors over 5-10 years. The average U.S. stock mutual fund has an annual turnover of 89%, according to Morningstar, Inc.
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Low fees allow more of our investors’ money to remain invested and potentially grow. Our fee is a fixed annual fee of 1% of assets under management. In 2004, Warren Buffet said one of the primary causes for shortfall in investor's returns was "usually because investors traded excessively or spent too much on investment management." According to Morningstar Inc., the average mutual fund charged 1.57% in annual expenses in 2003.
Our low turnover, long-term style can allow us to delay taxes on unrealized gains for many years. By putting off taxes, our portfolios don’t generate capital gains taxes as often, and we have a larger capital base from which to potentially grow.
We have never participated in an IPO (initial public offering), secondary offering, PIPE (private investment public equity), or derivative offering in our managed accounts. We have no conflict of interest with investment banking and have not attempted to gain access to “hot issue” IPO’s. Additionally, our performance is purely from market traded equity selections and has never been augmented by IPO’s or other related investments noted above.
One of our primary goals is to seek reduced volatility for our investors. We usually only invest in companies with a history of positive earnings and dependable management. We typically stay away from technology stocks and market hype. Large-cap U.S. companies are always the foundation of our portfolios in order to attempt to add relative stability.
Exposure to international stocks helps diversify our portfolios. When domestic markets are falling, foreign companies may have less correlation and may mitigate the overall losses in the portfolio.
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| 2001 Ross Avenue, 45th Floor | Dallas, Texas 75201 | Phone 214-965-7639 | Toll Free 800-301-8849 | info@gscapital.net |
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Investing involves risk and you may incur a profit or a loss. Past performance is not indicative of future results.
Raymond James & Associates financial advisors may only transact business in states where they are registered. Follow-up and individualized
responses involving either the effecting or attempting to effect transactions in securities, or the rendering of personalized investment advice
for compensation will not be made to persons in states where the financial advisor is not registered. International securities involve additional
risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability. These risks are
magnified because we have a large exposure to international securities.
In a fee-based account clients pay a quarterly fee, based on the level of assets in the account, for the services of a financial advisor as part of an advisory relationship. In deciding to pay a fee rather than commissions, clients should understand that the fee may be higher than a commission alternative during periods of lower trading. Advisory fees are in addition to the internal expenses charged by mutual funds and other investment company securities. To the extent that clients intend to hold these securities, the internal expenses should be included when evaluating the costs of a fee-based account. Clients should periodically re-evaluate whether the use of an asset-based fee continues to be appropriate in servicing their needs. A list of additional considerations, as well as the fee schedule, is available in the firm's Form ADV Part II as well as the client agreement.
International investing involves additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability. |
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