Portfolio Management Philosophy

VBA believes in finding young seasoned growth stocks and keeping them in the portfolio for as long as growth remains well above average. Our philosophy is to keep the winners for as long as possible and to aggressively sell stocks that do not deliver the expected performance, or that become substantially overvalued relative to the expected five-year earnings growth rate. Since we target a long investment horizon for each stock, the resulting portfolio turnover is very low at less than 30%.

In order to ensure that our team is fully up-to-date and has a good understanding of each investment, we limit our portfolio holdings to no more than 60 companies. Once a new investment idea is generated, we usually take an initial position of at least 1.0% of the portfolio. We then gradually increase our purchases of the stock as quarterly earnings progression develops. Normal weights for individual stocks range between 1% - 6%.

We always strive to invest in companies that will become dominant players. Our winners eventually become large-cap stocks. We do not believe in passing up on continuing growth just because the capitalization of a company has passed the small-cap/large-cap boundary. Consequently, we keep in the portfolio all stocks that continue to show attractive upside. We however must be careful to avoid getting into a situation where the weighting of large-capitalization versus small-capitalization stocks in the portfolio becomes too skewed towards large caps. We have consequently set a maximum weight of 25% of our total holdings that can be kept in large-cap stocks.