The Highly Concentrated Strategy (“HCS”) will hold up to 15 intensely researched large and highly liquid mid-cap stocks and ADRs. HCS utilizes bottoms up, fundamental analysis to identify and invest in companies with the requisite competitive positioning and advantages to capture long-term, secular growth opportunities. HCS seeks to identify companies and industries changing due to the impact of technology and to invest in those companies that will benefit from those changes.
By intentionally limiting diversification in the portfolio, HCS seeks to emphasize
company-specific business drivers identified during the research and diligence processes for each portfolio holding. Emphasis on idiosyncratic factors is intended to allow KDI’s in-depth research and investment judgement to drive investment performance with proportionally less reliance on systematic factors than typical diversified portfolios. Accordingly, KDI focuses risk analysis on idiosyncratic risk factors.
HCS’s limited diversification will drive active share, which should lead to less correlated returns compared to the broader market. HCS is intended to enhance investors’ overall equity allocation as a supplement to broader β exposure by creating overweight positions in select securities.
The Core Equities Strategy is a concentrated equities portfolio, typically holding 20-25 intensely vetted large-and-mid-cap stocks. Core Equities is comparatively more defensive than HCS as it specifically seeks to overweight stocks and sectors with defensive earnings such as healthcare. The Core Equities Strategy is designed to capture a “fair share” of upside in strong markets while providing investors peace of mind in weak markets by owning only high-quality companies with durable earnings.
KDI takes a long-term view on all investments and seeks to own companies that can continue to grow earnings over a long time horizon and across market cycles. KDI seeks to identify attractive risk/reward situations, concentrating our clients’ capital in exceptional opportunities that provide safety through less operating risk and have the opportunity to exceed index returns over time.