Principal Investment Philosophy
Coho's equity investment philosophy is based on the premise that the most effective way to create and sustain wealth in the equity markets is to achieve an asymmetric pattern of returns over time, where the portfolio demonstrates considerably less down market capture than its up market participation. This pattern should provide an opportunity for better than market performance over a full economic cycle, with less than market risk.
- The stocks within our custom advantaged universe (Coho 250) are explicitly chosen for their defensive characteristics of stability and consistent growth.
- Our proprietary valuation discipline (Coho Dividend Discount Model) ensures that within this investable universe, the portfolio is focused only on those stocks with reasonable valuations and compelling expectations.
- Portfolio construction is always focused on the least economically sensitive and most risk adverse sectors and business models. Our portfolio is uniquely comprised of two types of companies: 1)Demand Defensive and 2)Economically Sensitive companies.
- Our non-systematic risk is diversified over 25-30 holdings, where factor and business model correlations are carefully monitored.
- The resulting portfolio characteristics confirm the "shock absorbers" that are in place to instill downside protection relative to the overall equity market.
- We believe that our biggest competitive advantage stems from the process of constructing the Coho 250. Much work is done to identify the 250 companies that have the asymmetric performance characteristics desired. Our fundamental research effort only focuses on those 250 companies to build the portfolio.
- With a long-term focus and low turnover, we populate the portfolio with stocks of high quality companies that have demonstrated long-term predictable growth in revenues, earnings and dividends at reasonable valuations.
- Our strategic allocation to what we call the "demand defensive" sectors has been beneficial to performance over the long term.