Thursday, June 15th, 2006
Momentum ‘players’ deliver acorns, McQuaid
The $18.5bn Colombia Acorn Fund in this profile outlines its successful approach to growth investing. “We’re growth-at-a-reasonable-price investors,” said lead manager Chuck McQuaid. “We invest for the long term. Our average holding period is five years.”
McQuaid describes his fund as a competitor to momentum ‘players’:
“Momentum players (I hesitate to say “investors”) look for stocks that have been rising, along with fast earnings growth, and preferably earnings estimate increases. Many Momentum players completely ignore valuation. (Economists label luxury goods as those where demand rises when prices increase, so momentum players are the ultimate luxury goods buyers!) Because Momentum players buy at any price when earnings are good and often sell at any price when earnings are disappointing, we often like to sell our winners to them and sometimes buy their losers– at our dream prices. Momentum can work, especially in bubbles, but it’s not for us. It’s too far from our mission of investing in good businesses and targeting rational returns.”
This entry was posted on Thursday, June 15th, 2006 at 6:21 pm and is filed under GARP, Methods, Momentum. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
