Memo to: Vailshire Clients
From: Jeffrey W. Ross, MD, RIA
Date: January 3, 2016
Eyes on the Prize
For the majority of investors, 2015 was a difficult year. The S&P 500, Dow Jones
Industrial Average, most foreign equities and most commodities all notched losses
for the year. Neither Vailshire Capital Management nor its clients are surprised or
overly concerned with losing years, as we are well aware that—on average—one
out of every three years is a losing year for U.S. equities markets.
That said, we don’t intend on fostering anything but a culture of above-average
investment performance over periods of 5, 10 and 20+ years. We are in this for the
long-haul—as all business owners (aka, “investors”) should be—and remain
steadfast in selecting great companies selling at reasonable prices for our portfolio.
2016 Predictions
As I’ve pointed out on numerous occasions, predictions are simply guesses, no
matter how intelligent they sound. Examples include:
Where will the S&P 500 be at the end of 2016?
Will the stock market move up or down tomorrow?
Will the shares of company XYZ move up or down tomorrow?
What will bond yields do now that the Fed has raised rates?
Will the U.S. slip back into a recession this year?
No one knows the answers to these questions, yet I see people asking for answers
on Bloomberg television, CNBC, Barron’s and the Wall Street Journal every day.
Though some respondents have interesting answers, it is simply an entertaining
form of folly.
Predictions versus Macro-trends
Although we at Vailshire are decidedly disinterested in other people’s guesses about
the future state of our economy, we remain keenly interested in macro-trends—that
is, great ideas turned into reality by visionary leaders and their companies. Such
trends quite literally change our world and often make outstanding investment
opportunities.
Spotting world-changing macro-trends is not only interesting, but is often quite lucrative. Here are some “trendy” examples and companies that Vailshire has genuine interest in:
- Biotechnology, revolutionizing health care before our eyes
- Gilead, Celgene, Bristol-Myers Squibb, Pacific Biosciences
- Drones and Artificial Intelligence
- NVDIA, Ambarella, Google
- Virtual Reality
- Facebook, Microsoft
- The Internet of Things
- Cisco, Skyworks Solutions, NXP Semiconductors
- Merging Social Media and eCommerce
- Amazon.com, Facebook, Twitter
Quantitative Analysis
Besides investing at the forefront of the aforementioned (and several other) macrotrends,
Vailshire also applies proprietary quantitative analysis to find hidden gems
among the many thousands of investable companies. Such companies have
generally demonstrated years of revenue and earnings growth, gifted leadership
and significant insider ownership, yet remain below the radar screens of most
mainstream investors.
Given their relatively smaller sizes, these companies have significant upside
potential in the coming years, from 2x to even 10x. I recently wrote a Seeking Alpha
article about one such company called Nathan’s Famous Inc. (NASDAQ: NATH). You
can read about it here: The Big Mac Is Dead – Beef Up Your Portfolio With Nathan’s Famous Hot Dogs Instead
Of note, NATH is up 36% since I wrote the article three months ago on October 1,
2015, which translates into a 144% annualized (not actual) return.
Kudos to our proprietary quantitative analysis for uncovering this, and several
other, potential multi-baggers! I am certain that there are many more to come in
Vailshire’s future.
Conclusion
Although we still do not know the future with certainty, we are certain that the
future is bright for many of the fantastic companies within our portfolio. This will
result in impressive returns over the long-haul; a strategy that continues to be our
unwavering focus. Profits are the reward of the patient investor.
If you have cash on the sidelines, it is once again time to participate in the enormous
upside that awaits today’s brave investors. Please don’t wait until it’s too late. If
you need assistance, give us a call or email today. We’ll put your money to work for
you and your family immediately.
Thanks for investing with us.
Vailshire: Live well. Invest wisely.