Strategy
THE PARALLEL PROCESS
At Crabtree Asset Management, we apply a unique process to the creation of our flagship fund, The Crabtree Fund. We call it the “parallel process.” Unlike a traditional “serial” portfolio process, the parallel process creates a brand new portfolio of companies every three months. After the mid-point of each calendar quarter (i.e., the 15th of February, May, August and November), we run our proprietary quantitative screen. This screen searches the database of eligible stocks to find those that meet all five of our key criteria.
Once a list is assembled, we re-balance The Crabtree Fund portfolio by selling those companies that are no longer meeting all five criteria, and purchasing shares of those companies that do. The portfolio is at all times equally dollar-weighted among the qualifying stocks, so for those stocks that remain eligible to be in the Fund, additional shares may be bought or sold to adjust them to their new weight in the portfolio. Our experience is that roughly 80% of the stocks in the portfolio in one quarter, will remain in the portfolio during the subsequent quarter; the remaining 20% are swapped for new names.