Polen Capital, an investment manager that is based in Florida, has just released three investor letters, each for one of its main strategies – Polen Global Growth Strategy (letter), Polen Focus Growth Strategy (letter), and Polen Focus Growth Strategy (whose letter you can download below). In Polen International Growth’s letter, the firm disclosed Q1 2019 return of 12.51% gross of fees, versus return of 10.32% for MSCI All Country World Index (ex-US) (the “Index”) in the same quarter.
“During the first quarter of 2019, the Polen International Growth Composite Portfolio (the “Portfolio”) returned 12.51% gross of fees. The MSCI All Country World Index (ex-US) (the “Index”) returned 10.32%. On a relative basis, holdings in the Information Technology, Consumer Discretionary and Communications Services sectors contributed most to Portfolio re-turns. Holdings within Industrials, which include two data services companies and a distribution business, and Health Care were headwinds to relative performance. Data Services and Health Care are defensive areas that held up well and contributed to the portfolio’s outperformance in 2018. However, these sectors were out of favor in the first quarter.
International markets rallied strongly in the first quarter, a stark contrast to the prior quarter’s downward movement. The change in investor sentiment between the fourth quarter of 2018 and the first quarter of 2019 seems to stand as a proof point for Ben Graham’s famous observation about the short term, “In the short run, the market is a voting machine, but in the long run it is a weighing machine.” In less than 90 days, “the herd” shed a decidedly negative outlook on equities in exchange for a more sanguine view. Observing such changes is an interesting spectacle. However, they offer an important reminder of why our firm’s longstanding philosophy has often ignored short-term market noise. We act like business owners, not stock market operators. We have an eye toward each company’s competitive advantages, corporate strategy and long-term earnings growth potential. These considerations force us to keep our heads down as markets gyrate. Our goal each quarter is to maintain a portfolio of high-quality companies, which in aggregate can drive earnings growth – the long-term driver of share price movements – in excess of the Index. As such, we made few changes to the portfolio over the last few quarters despite rather sharp swings in the markets.”
You can download a copy of Polen Capital’s Q1 2019 Investor Letter for its Polen International Growth Strategy here: