CastlePoint's approach to equity investing is based on the fundamental belief that markets are inefficient and mispriced securities can be systematically identified and opportunistically acquired using a time-tested, rigorous, and highly disciplined investment process. The firm uses the following broad tactics – an outgrowth of the investment philosophy – in the pursuit of this goal.
Limit downside risk by acquiring securities trading at a 40% or greater discount to the estimated intrinsic value of the company. Building a portfolio using this approach frequently requires one to be indifferent to the market consensus (contrarian) and highly opportunistic.
CastlePoint's proprietary investment model, independent-minded portfolio management team, and partnership culture of investing alongside clients, are important and differentiating aspects of our proven and historically successful investment approach. CastlePoint began offering its flagship large cap equity product in 2005 and launched Integrated Energy in 2013.
|JOHN G. ALEXANDER, CFA
Portfolio Manager &
|DUSTIN S. MARTIN, CPA, CFA
Portfolio Manager &
DONALD L. TUTTLE, CFA
The investment philosophy that serves as the cornerstone of CastlePoint’s investment strategy is based on thoroughly researched and well-established financial theory.
Market participants tend to “overreact” to unexpected and dramatic news events.The natural tendency for many is to give more weight to recent information than prior data, regardless of the data's significance. Cognitive errors and emotion-driven mistakes of this nature create exceptional investment opportunities for patient, long-term investors.
Investment return volatility, while employing CastlePoint's disciplined risk controls, is historically comparable to or less than the relevant indices. Further, evidence suggests the benefit of diversification diminishes rapidly beyond 30 portfolio holdings. Therefore, CastlePoint's concentrated investment strategy focuses its efforts exclusively on fewer securites believed to hold the greatest potential for price appreciation without increased risk.
There’s little evidence anyone can consistently make accurate financial forecasts. And if possible, the forecast would be of little value if it’s consistent with consensus expectations as this is accounted for in the current price. Forecasts must be accurate and differ from the consensus to be valuable. Consequently, CastlePoint relies heavily on rigorous analysis of historical financial statements when calculating a company's intrinsic value; we rely on neither interally generated nor Wall Street published analyst projections.