Investment Philosophy

Blue Shores (BSC) believes that the greatest opportunity for an active investment manager to add value versus the passive benchmark alternative is to operate a portfolio free of capitalization restrictions, thus allowing the best investment opportunities to be included in the portfolio regardless of market capitalization. Additionally, BSC believes a core portfolio that is created by combining two independent strategies, one growth and one value, is the best structure for a style neutral portfolio.

BSC utilizes two underlying strategies that have polar investment styles, which enables the portfolio to better harness the risk-reduction benefits of modern portfolio theory. Portfolio holdings are generally limited to approximately fifty positions in order to meaningfully differentiate the portfolio from the broader equity market. The resulting portfolio is a single coherent strategy that is diversified by market capitalization, economic sector, and investment strategy / theory.

Paramount to BSC’s investment philosophy is the belief that equity markets are very efficient, but not perfectly efficient- particularly over the short-run. Furthermore, it is BSC’s belief that the market prices of publicly traded common stocks reflect both rational and irrational factors. Therefore, while fundamental analysis is the primary investment discipline utilized, technical analysis is also employed in the investment decision making process. Generally, the core equity strategy has a bias towards mid and small capitalization stocks that have less analyst coverage than the more well-known companies found in the S&P 500 Index.

In some market environments, Blue Shores may partially hedge the portfolio by purchasing inverse exchange traded funds (ETFs) if the risk of a bear market appears high. Such securities serve as synthetic short positions and generally play a limited role in the overall strategy. More frequently, broad market or sector ETFs may be purchased as temporary allocations until individual stock opportunities present themselves.

Balanced account investment management is available in which select fixed income ETFs are used in addition to the core equity strategy. While the core equity strategy tactically allocates assets to international securities, a global version of the strategy is under development that contains a significant strategic allocation to international positions with a focus on large, high cash-producing foreign companies. The foreign allocation complements the unique multi cap growth and multi cap value strategies that form the core portfolio.