Friday, September 5, 2014

Building a better portfolio

A key component to “making assets thrive” is investing in companies that are truly representative of the best in industry. These businesses are fascinating, captivating, and are changing the landscape of business. Examples of these are Facebook, Linkedin, Netflix, and Tesla. These have been premier stocks over the past two years. Naturally, companies like these are superb investments for a portfolio.

Buying and holding long term winners remains challenging. Often times, a stock like Tesla, for example, will appreciate 50% only to retreat 25%. Then, you ask the question, will it recover or fall further?

Our aim is to markedly improve our work at finding solid long term holdings for our client portfolios. This means a laser focus on research which can determine which stocks are worth holding for the long pull. These would be stocks that we would intend to hold through market fluctuations. This period would ideally exceed one year. We also want to identify these core holdings and communicate them to you. Your expectation should be that these stocks will be a cornerstone of your long term investment gains.

One of these stocks is Gilead Sciences, a drug research firm. Among other products, Gilead’s main drug is Sovaldi which treats Hepatitis C. The market for this drug is huge and growing. The World Health Organization estimates 130-150 million people are infected with this virus. Gilead estimates sales of this drug alone to be north of $14 billion in 2014 following its approval in December 2013. Meanwhile, total companywide sales for 2014 are estimated to be north of $24 billion. This is up from $11 billion in 2013! The impact of the products from this accelerating drug company could be far reaching. In the category of breakthrough medicine, Gilead holds the characteristics of a good long term investment.

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