Dynamic Portfolio Management

All Ponzio Capital portfolios are dynamically managed between the alpha and beta strategies (discussed below) in an attempt to provide above-market returns over the course of many years.

Though the term "dynamic portfolio management" might invoke the image of active trading, we typically only make one or two investments each quarter, under normal conditions.

The alpha Strategy

Through the alpha strategy, we seek to identify securities (typically stocks) that we believe are selling at 50% or less of their intrinsic value, and that we believe will appreciate significantly more than the broad market indices over the course of a number of years.

We determine intrinsic value as (i) the value of the company to a private owner, or (ii) the value of the company in liquidation (whether or not it will actually be liquidated).

Investments made through the alpha strategy are typically long-term holdings of two to five years.

The beta Strategy

Through the beta strategy, we invest in "workouts" – the securities of companies involved in mergers, acquisitions, going private transactions, restructurings, and more.

The beta strategy seek to provide consistently positive returns from year-to-year in an attempt to shield portfolios from significant losses during prolonged periods of sharp market declines.

In these investments, we determine the intrinsic value based on our expectations of the return offered and the estimated holding period.

Investments made through the beta strategy are typically short-term holdings of less than a year.

Focused Portfolios

Every portfolio managed by Ponzio Capital is focused, meaning that our portfolios are not diversified across hundreds or thousands of investments (e.g., like a mutual fund).

When fully invested, portfolios typically hold between five and twenty positions in a limited number of sectors and industries.

We invest only in our "top" few ideas.

Volatility Means Nothing

We do not worry about volatility as we do not believe that volatility is a risk. Instead, we believe that investors assume great risks when they invest in companies they don't understand, diversify into mediocre or bad investments for the sake of diversifying, or pay too much for too little value.

Client portfolios are volatile, and we don't lose sleep over this fact. So long as we believe that our data and reasoning are correct, we ignore volatility and try to let time and the ordinary course of economics work for us.

Invested Together (Joe too!)

At Ponzio Capital, our clients hold a very small number of positions. When we buy an investment, we typically buy it for all clients. Same is true when we're selling.

Joe is no exception. We only do with your money what Joe is willing to do with his own, at the same price and in the same percentage of his own portfolio*.

Clients (including Joe) are never on different sides of a transaction (e.g., "preferred clients" are selling while the "suckers" are buying)**.

* Only applies when transactions are made in pursuing our investment strategy and may not apply to clients whose primary investment goal is something other than long-term growth.

** Assumes that the "preferred clients" and "suckers" are all investing pursuant to our investment strategy.

Summing It Up

In Plain English, we strive to achieve long-term growth above the returns provided by the S&P 500 Total Return Index (which includes reinvested dividends).

We focus on investing in opportunities that we believe are significantly undervalued, and patiently wait for time and economics to work for us.