1. Philosophy: Clarity and discernment guide our investments in quality, undervalued companies and provide us with unhindered vigilance to adhere to our investment plan.  In other words, we continue to utilize, when appropriate, “strategic cost averaging”.

We believe two of the most powerful investment tools available today are “volatility” and “strategic-cost-averaging.” We also believe in diversification, not over-diversification (as with mutual funds and ETFs). We focus on risk-adjusted return. Our investment philosophy encompasses the following:
 

2. Strategy: We invest in companies and industries; not in the stock market, and seek to exploit fear- and greed-based irrational market pullbacks to increase our exposure in companies with strong fundamentals and attractive growth opportunities.

Fundamental investment principles and analysis is our core strategy. We are not market timers. Portfolio rebalancing* and strategic-cost-averaging** are done on a continual basis.

• Extensive sources for research
• Top-down and bottom-up analysis
• Invest in secular and cyclical trends
• Initial investment of no more than 5% in any one company
• Hedging of companies in the portfolio, when appropriate
• Portfolios consist of 25 to 35 companies***
• We don’t invest to mimic an index

* Strategic-cost-averaging into positions: Because the stock market is often driven by fear and greed, it provides us opportunities, on an ongoing basis, to strategic-cost-average into companies we want to own. We look forward to market corrections and pull-backs as an opportunity to buy more of the companies we want to own. 

**Rebalancing portfolio: We continually monitor and assess current companies owned, the fundamentals of the businesses and their valuations. Just as it is important to strategic-cost-average into companies we want to own, it is equally important to dollar cost average out of companies in an effort to lock in gains and keep portfolios appropriately allocated.

***Diversification: Studies have shown that a portfolio of 20 to 40 companies is an appropriately diversified portfolio. Diversification benefits are significantly reduced once a portfolio has over 40 companies in the portfolio. We are content in being patient looking for entry points into new positions, and continuing to strategic cost average into the companies we currently own.

Hedging: When appropriate, we will hold cash in portfolios and monitor the companies we own and the strength of the overall economy. Then, we evaluate the situation and adjust accordingly. Additionally, because we believe in investing in companies, not the “stock market,” when appropriate, we may use hedging techniques which enable us to continue to hold on to companies we want to own, despite what may be perceived as short-term negative influences affecting the company price.

3. Flexibility: Our flexibility allows us to buy more of the companies we want to own when they go “on sale.” 

Flexibility allows us to respond to uncertainty, and respond to market opportunities in a timely and cost-effective manner. Our active portfolio management allows for changes in the portfolio, based on unforeseen changes in the economy and/or businesses owned.

4. Transparency: Our clients understand what they own and why they own it, and the quality of their assets, helping to increase their confidence and clarity.

In addition, our clients have the ability to monitor their own portfolios. Nepsis houses no assets and does not custody securities.