HS Management Partners applies a focused, bottom-up, fundamental approach to quality growth equity portfolio management. Our experienced research team seeks to build a concentrated portfolio of 20-25 quality growth businesses.
Core to our approach is an emphasis on the quality of the business, the underlying earnings/cash flow potential of the business, and the valuation of the security. Our repeatable process allows for us to develop a strong working knowledge of the names in client portfolios. Suitable investment candidates for us typically include companies that we believe possess:
- Strong management teams
- Attractive business models
- Enduring competitive advantages
- High free cash flow characteristics
- Broad geographic platforms
- Strong, albeit reasonably attainable, earnings/cash flow prospects
As fundamental investors, we focus on identifying good businesses that we believe can place upward pressure on client portfolios by virtue of marrying growing earnings and cash flow streams with an attractive valuation.
In seeking to identify attractive investment opportunities, we employ a multi-dimensional approach to growth in businesses: across the growth continuum, up and down the market capitalization scale, and around the world (including non-U.S. domiciled equities provided our quality criteria are satisfied). We are benchmark agnostic, though we have found that companies that satisfy our investment criteria and objective of realizing generally predictable earnings and cash flow growth over time tend to operate in select industries.
While we are bottom-up investors, we believe that macro matters. And while we take a long-term view in investing, we believe that active management adds value. At HSMP, we treat our clients’ capital as scarce capital. Some of the main factors that influence our decision to partially or completely liquidate a security include our belief that a company’s fundamentals have diminished, its valuation has become too extended according to our criteria, and/or that a better investment alternative exists for our clients’ capital. Our concentrated approach to portfolio management necessitates we apply our best thinking, therefore requiring that we make tough decisions so as to maintain our 25 stock ceiling.
HSMP’s investment philosophy is fundamentally grounded and we believe pragmatic in nature. Over time, our approach has yielded positive absolute and relative long-term Performance.
Note: There is no guarantee that investing with HSMP will be profitable or that we will be able to effectively manage risk. Please refer to Disclosures and our Firm Brochure (ADV Part 2A) for more information about our Firm, strategy, fees, and risks.