Growth is a Condition, not a Category
A fundamental bottom-up process rooted in the philosophy that any company, regardless of sector, may present conditions for growth.
Michael: Silvant Capital Management invests in companies who can exceed investor expectations. We’re a growth equity manager, so we buy companies whose conditions for growth are being met. We figure that out by tracking their key metrics and then we do it in a risk controlled way that helps us avoid unintended consequences in the portfolio.
Michael: [00:00:18] We identify three to six key metrics on every company that we may decide to own in the portfolios. And that’s done by sector portfolio managers from the bottoms up, very fundamental in analysis to determine if the conditions or the leading indicators for that particular company can be met. And if it can grow more than investors think they can. So we’ll review financial statements, we’ll talk to their suppliers, their customers, the company themselves to try to determine how can they disrupt the markets they’re in. What kind of market share can they take and how can they really grow their business greater than investors have already priced into their current market share.
Michael: [00:00:55] I think one of the most important things we do a little bit differently is the way we think about growth. Growth for us is a condition, not a category, any company can grow. We want to have a bullet understanding of exactly what it would take company by company, stock by stock for these companies to grow again. And when you do that you free yourself from some of the standard large cap growth behavior that only says we have to have secular change, we have to have market disruptors. We can look anywhere and that ability to look anywhere gives us an advantage.
Michael: [00:01:27] Large cap growth equity is always a solid investment given its ability for returns as well as the risk you incorporate. We think now is a particularly good time for large cap growth investing because interest rates have declined for 30 odd years. And we are finally seeing the beginnings of a rising interest rate environment. We think that makes growth more scarce. We think active investing over passive investing becomes interesting again. And investors could expect to see the Russell 1000 Growth Index returns plus or minus 200 basis points on an annualized basis through the cycle.
DISCLOSURES: The assertions contained herein are based on Silvant’s opinion. This information is general and educational in nature and is not intended to be authoritative. All information contained herein is believed to be correct, but accuracy cannot be guaranteed. This information is based on information available at the time, and is subject to change. It is not intended to be, and should not be construed as, investment advice. Investors are advised to consult with their investment professional about their specific financial needs and goals before making any investment decisions.
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