Investors have a need to participate in public markets in a way that preserves capital, minimizes the probability of loss, and generates stable returns, both over good and bad times in the economy, and that’s exactly what our mandate is designed to do.
— Michael Valicek, Vice President, Investments
Approach
VCM integrates a proprietary mix of fundamental and quantitative factors with disciplined decision making to construct public market portfolios that generate stable risk-adjusted returns while prioritizing preservation of capital.
Conventional balanced public-market portfolio strategies generate returns during rising markets but destroy wealth during market declines.
VCM’s multi-strategy mandate was developed coming out of the last downturn. The strategy combines diversified, less correlated return sources, which provide stable returns across contrasting market environments.
The Multi-Strategy mandate takes tactical positions in equities, equity options and futures, commodities, currencies, and bonds, to create an ideal portfolio exposure profile for a given moment in time.
Process
VCM uses a disciplined investment process that integrates proven techniques including rigorous top down and bottom up fundamental analysis, market sentiment and technical analysis, and prudent risk management, to achieve strong investment returns.
Top-down asset allocation
Diversification and portfolio correlation are key considerations
Idea Generation
Research Process and Investment Strategy
Portfolio Construction
Execution
Risk Managment
Long and short equities
Equity options
Index options and futures
Currencies
Commodities
Government bonds
VCM screens and selects core equity holdings based upon a time-tested blend of six key considerations:
01
POSITIVE LONG-TERM SECULAR GROWTH TRENDS
Investing in companies exposed to industries with positive secular growth trends reduces risk and improves the likelihood of achieving attractive returns.
02
SUSTAINABLE COMPETITIVE ADVANTAGES
Strong competitive advantages prevent new entrants and minimize the threat of competition, reinforcing their owner’s ability to generate stable profits and cash flows.
03
BUYING AT A DISCOUNT TO ESTIMATED VALUE
VCM generally purchases all core-equity holdings at a meaningful discount to its estimated value. This discount provides both a margin of safety and an improved likelihood of achieving capital appreciation.
04
STRONG BALANCE SHEETS
VCM favors companies with strong balance sheets, as evidenced by high-quality assets, manageable leverage, and investment grade credit ratings. These factors also provide a margin of safety in the event of a macroeconomic slowdown.
05
CASH RETURNED TO SHAREHOLDERS
Selecting stocks with yields that are sustainable and expected to grow over time produces superior returns.
06
OPTIMAL SENTIMENT AND PRICING ENVIRONMENT
Once VCM establishes that a company meets fundamental investment criteria, analysis is conducted on market sentiment and price trends to establish optimal trade execution.
Risk Management
A Vigilant, Real-Time Risk Management Practice
- The VCM investment team runs daily risk reports on the entire portfolio, which are used to monitor for any changes to securities, companies, industries, and macroeconomic trends to which the portfolio has exposure.
- The risk reports include a detailed correlation matrix to closely examine any interdependent factors between portfolio holdings.
- The monitoring and management of the portfolio are ongoing – there is never a “set it and forget it” mentality to any investment decision.
Explore VCM Strategies
VCM Real Estate
VCM Real Estate identifies and acquires multifamily, medical office and lodging assets located in secondary and tertiary markets, and then employs top-class property management to add value.
VCM Private Equity
VCM Private Equity invests in established companies led by successful entrepreneurs and management teams in sectors with which we are intimately familiar.
