Growth Team
Investment Philosophy & Process Overview
Artisan's Growth investment team attempts to identify companies that possess franchise characteristics, that are selling at attractive valuations and benefiting from an accelerating profit cycle.
The investment process focuses on two distinct areas - security selection and capital allocation.
Security Selection
Franchise Characteristics - These are characteristics that the team believes help to protect a company's stream of cash flow from the effects of competition. The team looks for companies with at least two of the following characteristics - low cost production capability, possession of a proprietary asset, a dominant market share, or a defensible brand name.
Attractive Valuations - Through its own fundamental research, the team estimates the amount a private market buyer would pay to buy the entire company (the company's "intrinsic value" or "private market value") and considers whether to purchase a stock if it sells at a discount to that estimate.
Accelerating Profit Cycle - The team tries to invest in companies that are well positioned for long-term growth, at an early enough stage in their profit cycle to benefit from the increased cash flows produced by the emerging profit cycle. Companies that the team believes are well positioned for long-term growth typically have predictable streams of cash flow through real growth in demand for their products or services and appear to be well positioned to take advantage of opportunities in their markets.
Capital Allocation: Garden, Crop, Harvest® Investing
GardenSM investing is where the investment process usually begins. Garden investments generally are smaller positions in companies that the team believes have a good franchise, attractive valuation and accelerating earnings, but that are at too early a stage in their profit cycle to be confident the investment will be successful.
CropSM investments form the segment of the portfolio intended to hold the companies that are moving into the strongest part of their profit cycles. Through a detailed investment analysis, the team determines what it believes is necessary for a company to continue to generate positive earnings. When a company begins to perform consistently with the team's expectations, the team will generally increase a portfolio's position in that company and move the stock from Garden into Crop investments. The majority of the performance in the portfolio has typically been attributed to the investments in this segment.
When a company's profit cycle begins to decelerate, or a stock is approaching the team's estimate of full valuation, the team generally moves the stock into its HarvestSM investments, and reduces the size of the position.
The team believes selecting stocks exhibiting franchise characteristics, attractive valuations and accelerating profit cycles, and allowing stocks in progress through the three stages of the portfolio (garden, crop, harvest® investing), increases the likelihood of delivering upside participation with downside protection.
Broad Knowledge
The team overlays security selection and capital allocation with the capability to invest opportunistically across the entire global equity spectrum. It is the team’s goal to have broad knowledge of the global economy to ensure that it is able to find growth wherever it occurs. This capability extends from the design of the team, which leverages the broad experience of the portfolio managers and the deep expertise of the analysts on the team.
Important Investment Risk Disclosure
Important Investment Risk Disclosure
Global Opportunities Strategy
International investments involve special risks, including currency fluctuation, lower liquidity, different accounting methods and economic and political systems, and higher transaction costs. These risks typically are greater in emerging markets. Securities of medium-sized companies tend to be more volatile and less liquid than those of large companies, may have underperformed the securities of large companies during some periods and tend to have a shorter history of operations than large companies. Growth securities may underperform other asset types during a given period.
U.S. Mid Cap Growth Strategy
Securities of medium-sized companies tend to be more volatile and less liquid than those of large companies, may have underperformed the securities of large companies during some periods and tend to have a shorter history of operations than large companies. Value securities may underperform other asset types during a given period.
U.S. Small Cap Growth Strategy
International investments involve special risks, including currency fluctuation, lower liquidity, different accounting methods and economic and political systems, and higher transaction costs. These risks typically are greater in emerging markets. Securities of medium-sized companies tend to be more volatile and less liquid than those of large companies, may have underperformed the securities of large companies during some periods and tend to have a shorter history of operations than large companies. Value securities may underperform other asset types during a given period.