Investment Strategies

The Concentrated Equities Strategy is a long-bias all-cap strategy, which invests in a limited number of intensely vetted, high-quality public companies (typically 15-25 stocks). The Concentrated Equities Strategy hedges market risk through its willingness to hold significant amounts of cash and by occasionally selling call options against its holdings to provide some downside protection in times when less risk is warranted. Utilizing the flexibly to be in cash and invest across all market caps, KDI seeks to identify attractive risk-reward situations, concentrating our clients’ capital in exceptional opportunities that provide a good margin of safety and the opportunity to exceed the returns of the index over time. There are taxable and tax-exempt versions of this strategy.

The Value Preservation Strategy is designed for more conservative investors seeking greater capital protection with the opportunity for attractive risk-adjusted returns. The Value Preservation Strategy invests in high-quality, typically large-cap companies. The strategy writes in the money options against all the positions in the portfolio. The option terms are generally six months to two years. The dividends and call option premiums provide meaningful downside protection to Value Preservation investors. The strategy is differentiated from other “covered call” strategies through its use of in-the-money call options instead of out-of-the-money call options.

KDI – Value Preservation Strategy 3Q (2015)

The Concentrated Equities Strategy is a long-bias all-cap strategy, which invests in a limited number of intensely vetted, high-quality public companies (typically 15-25 stocks). The Concentrated Equities Strategy hedges market risk through its willingness to hold significant amounts of cash and by occasionally selling call options against its holdings to provide some downside protection in times when less risk is warranted. Utilizing the flexibly to be in cash and invest across all market caps, KDI seeks to identify attractive risk-reward situations, concentrating our clients’ capital in exceptional opportunities that provide a good margin of safety and the opportunity to exceed the returns of the index over time. There are taxable and tax-exempt versions of this strategy.

The Value Preservation Strategy is designed for more conservative investors seeking greater capital protection with the opportunity for attractive risk-adjusted returns. The Value Preservation Strategy invests in high-quality, typically large-cap companies. The strategy writes in the money options against all the positions in the portfolio. The option terms are generally six months to two years. The dividends and call option premiums provide meaningful downside protection to Value Preservation investors. The strategy is differentiated from other “covered call” strategies through its use of in-the-money call options instead of out-of-the-money call options.

The Concentrated Equities Strategy is a long-bias all-cap strategy, which invests in a limited number of intensely vetted, high-quality public companies (typically 15-25 stocks). The Concentrated Equities Strategy hedges market risk through its willingness to hold significant amounts of cash and by occasionally selling call options against its holdings to provide some downside protection in times when less risk is warranted. Utilizing the flexibly to be in cash and invest across all market caps, KDI seeks to identify attractive risk-reward situations, concentrating our clients’ capital in exceptional opportunities that provide a good margin of safety and the opportunity to exceed the returns of the index over time. There are taxable and tax-exempt versions of this strategy.

The Value Preservation Strategy is designed for more conservative investors seeking greater capital protection with the opportunity for attractive risk-adjusted returns. The Value Preservation Strategy invests in high-quality, typically large-cap companies. The strategy writes in the money options against all the positions in the portfolio. The option terms are generally six months to two years. The dividends and call option premiums provide meaningful downside protection to Value Preservation investors. The strategy is differentiated from other “covered call” strategies through its use of in-the-money call options instead of out-of-the-money call options.