The popularity of U.S. large cap stocks makes them the most followed and the most efficiently priced. Only active managers with above average skills or a competitive edge have an opportunity to boost risk-adjusted returns for this segment. Beacon Street Capital, with its consistent, repeatable process designed to capitalize on misvalued stocks, is one of those managers.
Our Mission: To provide a better way to invest in large cap stocks.
Our Objective: To achieve significant alpha with low volatility over a 3-5 year horizon.
Our Product: Separately Managed Accounts with a blend of individually selected growth and value large-cap stocks.
Our Methodology: Traditional managers depend on estimates of future earnings to determine investment value, and those future earnings are driven by internal growth potential created by the current allocation of capital. However, since capital allocation is a function of management's view of future business, changes in internal growth potential that transform into expected earnings are often first observable in the balance sheet. From this notion we created an accounting-based linear algorithm, using key balance sheet variables, to quantify internal growth potential. We have observed for more than a decade that a change in this measure of growth potential serves as a proxy for a change in the value of a company's stock often before the market can react. Using our definition of internal growth potential gives us a competitive edge unavailable to other managers in the buy/sell decision process, which translates into a significant source of consistent excess returns for our clients.
Furthermore, because internal growth potential is less volatile than expectations of future value, these excess returns are achieved with a low standard deviation when compared to a benchmark index. A low standard deviation boosts the power of compounding on rates of return and causes money to grow exponentially. These two factors, excess returns and low volatility, are the keys to building wealth over time and the primary objectives of Beacon Street Capital, LLC.