Tax – Managed Strategy
Similar to our All Cap Core strategy, our Tax-Managed strategy focuses on our long-term investment themes, buying great companies at attractive prices, and selling prudently based on valuation, fundamentals, and tax management.
Our investment strategy differs from the All Cap Core strategy in three areas:
Average holding period - although many of our large positions tend to be long-term holdings, we trade more actively in the Tax-Managed strategy, attempting to capitalize on short- and medium-term market fluctuations to buy low and sell high.
Short Selling - we will short sell stocks in sectors not expected to benefit from our long-term investment themes, or where we believe the stock's valuation is unattractive relative to the market, or where the company is experiencing deteriorating fundamentals and the stock price does not reflect such.
Options - when market volatility is favorable for options premiums, we sell call and put options to earn premiums and to sell and buy positions at opportunistic prices.
Our Tax-Managed strategy focuses on generating attractive after-tax returns. To achieve this, we harvest short-term losses to offset gains. In addition, we are reluctant to sell stocks with short-term gains due to disadvantageous taxation at high ordinary income rates. Most of the gains historically generated in our Tax-Managed strategy have been long-term, providing attractive after-tax returns to our clients.