While the Growth and Opportunities strategy will typically constitute a minority, if any of a client’s equity allocation, it is intended to produce higher relative returns, although at a higher level of risk.

Growth stock candidates will usually trade at a premium to overall market multiples, but due to potential for long-term top-line and bottom-line growth they still represent an attractive investment.  The FANG stocks (Facebook, Amazon, Netflix and Google) are recent examples of stocks that have historically traded at high multiples, but have executed their strategies with tremendous success and investors have reaped huge rewards as the companies’ stock prices have skyrocketed over the last several years.  Naturally, the law of large numbers may limit future appreciation as several of these tech companies have market capitalizations near or above a half trillion dollars!  Markets do become saturated, competitive and companies that dominate may be subject to antitrust scrutiny.  Maidstone seeks to find companies that trade at reasonable multiples given their recent growth history and company and industry prospects.

Opportunity stock candidates may be attractive for a number of reasons.  We search for candidates that we believe have asymmetrical return profiles, meaning that our assessment of the potential for appreciation is considerably greater than our assessment of potential downside.  Examples of candidates may be stocks of companies that are in an industry-wide or economy-wide cyclical downturn and have lagged the returns of the overall market despite maintaining strong fundamental prospects.  With the ever-increasing presence of algorithmic trading and technical trading, stocks often trade well below or well above their intrinsic value due to trading momentum and inertia.  In the long-run, we believe that company fundamentals will triumph and patience will be rewarded, although we remain mindful of the influence of momentum and technical traders when entering and exiting positions.