U.S. Large Cap
The Large-Cap Equity strategy seeks to invest in high-quality U.S. businesses with durable long-term prospects where our fundamental research identifies a gap between long-term business value and current market expectations. A team of generalists evaluates companies across sectors using a repeatable, fundamental research process and strict criteria for business quality, balance sheet strength, management alignment, and valuation. We seek to buy businesses at a discount to our estimate of intrinsic value and position sizes reflect conviction and margin of safety. The strategy maintains a concentrated portfolio of companies typically valued at more than $20 billion, diversified across sectors, industries and business models.
Fact Sheet Strategy History and Details
The Large Cap strategy is a relatively concentrated U.S. equity portfolio that invests in U.S. Domestic equities with market capitalization typically over $20 billion, diversified by sector, industry, and business model. The strategy is diversified primarily by end market exposure and business model. This diversification can be approximated by sector and industry, although the portfolio may be absent entire sectors and industries that do not conform to our investment process and quality standards.
The strategy seeks to invest in high-quality, competitively advantaged businesses with good long-term prospects that are trading at a discount to intrinsic value. It is our belief that such businesses are best equipped to outperform their peers over full market cycles. The repeatable, process-oriented nature of our portfolio management employs substantial margin of safety, strict hurdle rates and the ability to organically compound capital. Strong balance sheets, management/shareholder alignment and revenue resiliency reduce the risk of permanent impairment of capital.
Multi-Horizon Returns
| QTD | YTD | 1YR | 3YR | 5YR | ITD | |
|---|---|---|---|---|---|---|
| Large-Cap Equity (Gross) | 7.33% | -3.65% | 8.45% | 15.27% | 8.88% | 9.27% |
| Large-Cap Equity (Net) | 7.05% | -4.13% | 7.37% | 14.12% | 7.80% | 8.19% |
| Russell 1000 Index | 15.13% | 10.32% | 22.01% | 20.47% | 12.66% | 12.99% |
| Excess (Net) | -8.08% | -14.45% | -14.64% | -6.34% | -4.86% | -4.80% |
Sector Positioning
| Portfolio | Benchmark | ||
|---|---|---|---|
| Financials | 30.2% | 12.0% | |
| Information Technology | 26.2% | 36.2% | |
| Communication Services | 15.0% | 9.4% | |
| Consumer Discretionary | 12.3% | 9.4% | |
| Health Care | 9.5% | 9.1% | |
| Industrials | 6.1% | 10.0% | |
| Consumer Staples | — | 4.4% | |
| Energy | — | 3.0% | |
| Materials | — | 2.1% | |
| Real Estate | — | 2.1% | |
| Utilities | — | 2.2% | |
| Cash & Other | 0.6% | 0.0% |
Portfolio Characteristics
| Portfolio | Benchmark | |
|---|---|---|
| # of Securities | 23 | 1,026 |
| Active Share | 84.1% | — |
| Wtd Avg Mkt Cap | $633.8B | $79.6B |
| Median Mkt Cap | $86.5B | $17.2B |
| Gross Margin | 53.1% | 50.6% |
| EBIT Margin | 28.0% | 26.5% |
| ROIC | 21.3% | 25.1% |
| P/E | 21.6x | 25.2x |
| P/CF | 16.3x | 18.6x |
| FCF Yield | 4.0% | 2.8% |
| Net Debt/EBITDA | 0.6x | 1.3x |
Top 5 Holdings
| LRCX | Lam Research Corporation | 10.50% |
|---|---|---|
| GOOGL | Alphabet Inc. Class A | 10.05% |
| AMZN | Amazon.com, Inc. | 8.51% |
| SCHW | Charles Schwab Corp | 7.36% |
| MCK | McKesson Corporation | 6.33% |
| Top 5 Total | 42.74% | |
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