"Attractive investment management organizations encourage decisions directed toward creating investment returns, not toward generating fee income for the manager. Such principal-oriented advisors tend to be small, entrepreneurial, and independent."
David F. Swenson, Yale CIO, in Pioneering Portfolio Management.
Mission
To achieve significant alpha and better risk attributes over a 3-5 year horizon, with superior service and transparency through Separately Managed Accounts.
Specialties
(1) U.S. Large Cap Growth or Large Cap Core equities.
(2) High "tax-deferred" income through energy Master Limited Partnerships (MLPs) with growth potential.
Methodology
The starting point to determine any business's growth
potential is its employment of capital, which is first reflected on its
balance sheet. Academic studies show that certain balance sheet
items have predictive qualities related to a change in a company’s
internal growth potential and that the market is slow to react, thus
creating a mispricing anomaly. To capture this anomaly Beacon
Street Capital created a sophisticated accounting-based algorithm whose
change serves as a proxy for a change in the price of a company's stock,
thus giving us a competitive edge in the buy/sell decision process.
To manage risk we combine this measurement of growth potential
with a bottom-up fundamental analysis to select only companies that are
profitable, financially strong and have positive cash flow. The result
is a hybrid form of portfolio management that combines a quantitative
marker with fundamental analysis to create
a new pathway to
alpha, one which generates a consistent and timeless source of
excess returns for us and 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.
Experienced. Capable. Consistent.