Avalon's investment philosophy is rooted in traditional "Growth Stock Theory" with disciplines that employ primary industry and company research as well as financial modeling. Avalon aims to identify dynamic managements and businesses with superior brand value and innovation prowess that are operating within industries underpinned by secular demand drivers (fertile fields) for future growth. Our time horizon for investments is long, mirroring those of the most renowned companies that are committed to balancing current cash flow generation with capital investment for sustainable future growth.
Avalon's portfolio of long holdings is comprised of best-of-breed industry leaders, distinguished by established brand value, unique or disruptive product innovation, and differentiated marketing and distribution capabilities that position them well for sustainable outsized long-term growth. In contrast, short positions center on businesses facing market share loss, product commoditization, or showing signs of under-investment and deteriorating profit quality that will likely result in sub-standard growth or declining rates of profitability.
Across the five key sectors of focus (global consumer, technology, media, healthcare, business services industries), we construct a portfolio of long core stocks, tactically hedged with short stocks and options aimed to reduce market, cyclical industry, and company-specific risks.