GIPS Performance

The RGAIA Team

Investment Strategy

We invest with a 3 to 5 year timeframe, hoping to hold each position as long as possible, though knowing markets often overshoot to the upside as they do the downside. Given this reality, we understand that an infinite holding period is the exception, not the rule. We target the 3 to 5 year timeframe because while the market itself tends to price in a long duration, the average annual turnover of US stocks is over 250% per year, and consequently, the average transaction is premised on the quarterly newsflow of a given company rather than the long-term value proposition. This mismatch between the duration of equities and the holding period of the average investor is a crucial source of inefficiency in market valuations. Moreover, longer holding periods provide a tax advantage and minimize transaction fees.

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Portfolio Construction

We operate what we would call a moderately concentrated portfolio. We target 25 total positions, with a standard deviation of 5. Our top 10 positions will consistently account for around half of our portfolio. We sometimes build individual positions with more than one security (for example, we might own a stock itself and call options on the stock), though we view this as one position, not two for the purposes of our 25 position target. When we develop a broader thesis worthy of conviction, we will target a portion of our portfolio towards that thesis, but divide the allocation amongst several separate and distinct securities.

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