Approach & Process
Fundamental, Intensive, Hands-on Research
Our investment approach emphasizes the selection of what we believe are stocks of high-quality companies with compelling potential for long-term capital appreciation. A fundamental aspect of our research process is that we do the work ourselves, meaning that we internally formulate an investment hypothesis and then rigorously test that hypothesis through multipronged, hands-on analysis. We constantly seek new information and work hard to be earlier than others in understanding what is occurring and why it is important to investors.
Our approach of blending top-down macroeconomic analysis and theme development with bottom-up stock selection sets us apart from other fund managers. It is a time-tested approach that has been consistently applied through various market conditions.
Marsico's investment approach combines elements of "top-down" macroeconomic analysis and "bottom-up" company and security analysis. Our macroeconomic analysis - which includes an assessment of factors such as interest rates, inflation, monetary policy, fiscal policy, trade policy, currency movements, demographic trends, the regulatory environment, and the global competitive landscape - serves to create a strategic backdrop for actual portfolio construction. We may also examine other factors that may include the most attractive global investment opportunities, sector and industry trends, industry consolidation, and the sustainability of financial trends.
In our bottom-up stock selection process, stocks are evaluated and selected on the basis of attributes such as market-share position, excellent management teams, improving profit margins, solid balance sheets or free cash-flow generation. A positive, transformational catalyst, such as a major new innovative product or new management team, may also be an important criterion. In addition, we carefully consider a stock's current valuation in the context of internally projected growth rates and peer-group comparisons.
A Flexible Approach to Defining "Growth"
The majority of the Marsico Funds’ assets are invested in what we call core growth companies: typically well-established seasoned companies that we believe may offer the potential for long-term attractive, above-market, relatively predictable future earnings growth rates. Depending on our macroeconomic view and company specific investment opportunities, we may allocate smaller portions of the Funds to Aggressive Growth or Life Cycle Change companies. Aggressive Growth allocations enable us to take advantage of companies that we believe may produce rapidly accelerating earnings growth. Life Cycle Change allocations allow us to invest in companies that are undergoing positive, transformational change in their business model that we believe could serve as a catalyst for substantially improved earnings growth in the future.
Companies undergoing a positive, transformational change in their business model, such as a merger, acquisition, new product, new management team, favorable regulatory development, and/or positive industry-level change that we believe could serve as a catalyst for substantially improved earnings growth in the future.
Typically well-established, seasoned companies that we believe may offer the potential for long-term attractive, above-market, relatively predictable future earnings growth rates.
Companies that we believe may produce rapidly accelerating earnings growth well in excess of overall market performance.