At Kanos, we focus on absolute returns for our clients, not relative performance versus an index which we believe is the motivation driving many money managers today. The incentive to mimic an index can lead to building positions in an overvalued market, or staying with positions too long despite deteriorating fundamentals. Our independence and ability to de-emphasize index comparisons allow us to be opportunistic with winning positions and to limit risk in losing positions.
We use a “top down” investment framework to evaluate economies and currencies, identifying attractive situations and industry sectors, and then us a “bottom up” approach to choose individual securities and investments. We follow the macroeconomic, monetary, fiscal, and political landscapes in the United States and major international countries to find attractive opportunities.
We then layer in traditional fundamental ratio analysis – including price/cash flow, price/earnings, and price/book value and combine this analysis with other factors such as balance sheet strength, profitability, growth prospects, dividend yield, and payout ratios to come up with actionable investment decisions.
We are predominately value-oriented in our investment style. However, we do consider the growth prospects of potential investments to find the most attractive candidates. Although we primarily use fundamental analysis, we also follow some technical analysis in order to better understand the near-term movements of stocks or investments we own or are considering for investment/divestiture.
Tailored Solutions for Investors
We tailor portfolios according to each client’s individual risk profile and return expectations. In general, we believe risk management is essential to preserving wealth over time. We manage portfolios with this principle in mind. We often set exit points under long positions we have entered and move this level higher as the position appreciates, attempting to preserve gains while not being scared out of positions by temporary weakness in the stock price. If we enter a short position, we generally set tighter exit points above the entry price and adjust to subsequent price movements to manage risk.
Cash Used to Manage Risk
At Kanos, we consider cash to be an important asset class. We are not afraid to get out of positions and keep assets in cash while looking for better opportunities. Although cash currently pays far less in yield than it has historically, we still believe it plays an important role in asset allocations, especially during times of high uncertainty.
Contact us to learn more about investing with Kanos.