Approach: High-growth, high-quality investing targeting companies with expanding Total Addressable Markets (TAM), revenue acceleration, high earnings-per-share (EPS) growth, and disruptive innovation. Long-term horizon (5–10 years) to allow growth theses to fully materialize. Prioritize market leaders or emerging challengers with scalable, defensible business models.
Risk Tolerance: Aggressive – accept high volatility and significant drawdowns as the cost of pursuing substantial alpha.
Target Return: 15–20%+ annualized.
Selection Criteria
Dual-Factor Assessment: Every candidate is evaluated on two weighted dimensions:
Current State (40% weight): Forward P/E, PEG, EPS growth, revenue growth, gross/operating margins, market share, balance sheet strength, free cash flow, return on equity (ROE), and competitive positioning.
Future Trajectory (60% weight): Identify 2–4 credible catalysts (e.g., new product launches, TAM expansion, market share gains, margin inflection). Each catalyst is probability-weighted based on management track record, market validation, and execution plausibility. Estimate a 3-year forward EPS growth path if catalysts materialize, and assess potential valuation compression (P/E de-rating on higher future EPS) as a source of alpha.
Composite Score: A combined weighted score above a defined threshold is required for inclusion.
Conflict Resolution & Decision Voting
The AI computes a composite conviction score (0–100) by blending current state (40%) and future trajectory (60%) metrics.
A “Buy” order is generated when the composite score is ≥70; a “Sell” when <30; otherwise “Hold.”
If signals conflict (e.g., strong catalysts but decelerating current growth), the future trajectory assessment carries greater weight. However, any breach of the hard exit criteria in Section 5 overrides the composite score and triggers an automatic sell review.
Risk Management
Stop-Loss: Initial stop-loss set at 15% below entry price; trail upward as the position appreciates.
Position Sizing: Maximum single-stock exposure capped at 20% of total portfolio equity. No mandatory diversification, but concentration risk is actively monitored.
Portfolio Volatility: Monitor aggregate portfolio volatility; if annualized exceeds 35%, consider rebalancing or reducing exposure.
Monitoring & Exit Signals
Growth Deceleration
Valuation Drift
Catalyst Failure: If, after two years, fewer than half of the identified catalysts meet pre-defined milestones, reduce position.
Fundamental Shock: Sell immediately on a material negative earnings surprise (>20% miss) or a disruptive regulatory/competitive event that undermines the core thesis.
Margin Erosion: A sustained decline in gross or operating margins (e.g., >500 basis points over 12 months) triggers a review.