A recent article in Barron’s highlights Polen Capital, describing the “high conviction, low turnover strategy” it has applied over the last three decades.”
“The firm’s flagship Focus Growth strategy has delivered about 15% in compounded average annual growth since its 1989 inception through the end of July—over which time it has owned fewer than 130 names.”
The article explains that Polen’s global fund, launched in 2015, applies the same discipline—and over the past three years has returned an average of 19.6% a year. With 25 to 30 holdings, it says, the global fund “has a wide mandate,” but adds that every company considered must meet five criteria:
- Cash-rich balance sheet with little debt
- Strong free cash flow to make acquisitions or return capital to shareholders
- Sustainable return on capital of at least 20%
- Steady or increasing profit margins
- Revenue growth that is independent of economic or industry cycles
The article notes that “a common theme across the portfolio is digital transformation” noting that the pandemic has “accelerated consumer and industry adoption of all things digital.” Specifically, it notes PayPal and Autodesk as two of the fund’s holdings.
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