When the Adams Funds board of directors asked their CEO, Mark Stoeckle, what was ahead for the company, he replied that he would continue to contribute to what was most effective for shareholders.
After all, if an investment approach has survived several market crashes, including the Great Depression, the bar will already be very high. However, the company is aware that many things have changed in the way the fund invests, despite its 90-year history. Part of that change came from the very need for change, the need for adaptation and evolution along with the market. For example, when the fund first started in 1929, the S & P500 index did not exist. DOW was made up of industrial companies of the time, and there was no algo trading.
Combined with the firm's extensive institutional knowledge and ongoing research and analysis by the fund's team, Stoeckle continues to outperform. Since taking over the post in 2013 after leaving BNP Paribas, the fund has generated 15.1% return on an annualized basis, compared with 14.2% on the S & P500.
Stoeckle takes a non-strategic approach to different sectors before investing. This means that if HC shares make up 10% of the SPX, its portfolio will have the same weight as the sector. This is repeated for the other 10 sectors. He admits that he cannot successfully select sectors. He is not defined as a macro investor. His strength lies in individual stock selection His stock selection process consists of four steps when he "scans" for potential additions to his portfolio.
First, he is looking for companies with strong returns and good balance sheets as well as high return on equity. He then uses a quantum model to sort stocks by various factors, including momentum. The third step is to determine whether the company is fairly valued in its sector. Finally, the graphs are looked at and a technical analysis is applied to determine if the right time of entry has come. Top stocks are included in the portfolio. The following is risk control.
And so, as he reveals his selection process, he also shares his top three stocks.
2. Bank of America
Source: Business Insider Prime
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