An Investment Process for the Modern Age

Kingsland Investments builds portfolios through a time-tested stock selection process that has been developed and perfected over the last 25 years.  The process begins by identifying those companies that are leading transformational change in the economy, and then owning the stocks as the market discovers their underappreciated earnings power.   We seek transformative companies that have an alternative solution – product, technology, or service -- that is vastly superior to that which it is replacing, leading to rapid adoption in the market place.   In short, we are in search of the next generation blue chip companies, those that we think can grow several hundred and even several thousand percent in size over the next 10 years or longer. The investment community tends to materially underestimate the market opportunity and growth of these businesses, which provides Kingsland Investments the ability to capture excessive alpha, often in a short period of time.

We believe the current environment is one that is uniquely conducive to generating a substantial number of such transformational opportunities. We have entered the fourth industrial revolution, in which cyber-physical systems are emerging, integrating physical, digital, and biological elements in a seamless way. Unprecedented computing power and information is now available to billions of people, whose creativity and ideas can birth new businesses with access to a connected global audience. All of these factors have enabled an environment in which transformative companies can grow faster for longer.

We spend a lot of time understanding the opportunity in front of every investment. The path of emerging businesses will be determined by a number of unanswered questions. We attempt to answer them in a systematic way, examining each company’s business model, management team, competitive environment, and macro environment. Every data point is viewed as a single piece of the puzzle. We think of each opportunity as a 100-piece puzzle in which six pieces are on the board. Every data point will either support or refute what we envision the opportunity may be for a company and will drive our buy/hold/sell decisions.

Alpha generation is all about translating our accumulated knowledge on a company or industry into buy and sell decisions that capture returns that are better than the index.  Paramount to this is the discovery of our investments by other investors.  Discovery leads to demand/supply imbalance of stocks that leads to stock appreciation exceeding (oftentimes far exceeding) overall market returns.  Once the demand and supply of shares are in balance, the excessive returns often end and sometimes reverse…. signs to reduce or eliminate positions. We take all of this into account when constructing portfolios. We attempt to overweight those investments that are revealing their earnings power at a time when the market is discovering it. If our portfolio has a lot of investments that meet these criteria, it should deliver meaningful alpha.

This is the Kingsland process.

Blue Chip Leaders of the Digital Age are at Different Stages of their Life Cycle