Strategy

Moreover, doing things quantitatively ensures that we’re not getting “beat” by stocks that our competitors own but which we don’t. The discipline of the data-based strategy is that we actually do search the entire universe of available companies to find our investments. This is important because generating alpha is essentially a contest between The Crabtree Fund and our benchmark, as well as our technology fund peers. It’s paramount that we search exhaustively without bias or emotion to find the alpha generators.

Lastly, our data-based approach means that we’re not dependent (intentionally or accidentally) on the Sell-Side to provide that pool of candidates from which we choose our stocks. The pool of stocks from which we select our portfolio includes any public company filing SEC documents. We don’t need a company to have Street coverage to be eligible for our fund. Since alpha is often generated very early in a company’s lifespan, often while a company is uncovered by Wall Street, our parallel process automatically includes those under-the-radar companies in its consideration.

Perhaps most important is this insight, learned over many years of investing in growth companies in general and technology stocks in particular: Generating alpha by investing in such companies depends far more on the basic structural, competitive and financial health of the company, and almost never on the company’s proprietary technology or other intellectual property.