Q?How would you describe your investment style?

We are bottom-up investors and style-agnostic. Our portfolios will generally hold more growth stocks than value stocks, but we usually own both types of stocks in our portfolios. We run concentrated portfolios with 40-to-70 stocks, with the exception of the Patrumin U.S. Dividends Select 25 and the Patrumin Global Select 25 equity strategies, which both hold 25 stocks.

Q?How do you achieve diversification* in the portfolios?

For all investment strategies at Patrumin, we view diversification in three dimensions:

  1. sector diversification
  2. capital structure diversification
  3. market capitalization diversification.

Capital structure diversification is simply owning some companies that have long term debt and some that do not. We are not afraid of investing in companies that leverage ROE (return on equity) via long-term borrowings–we actually think that it often makes sense. However, we need to understand the business model and company very well beforehand.

Market capitalization diversification is ensuring our portfolios have representation of larger companies along with midcaps and smallcaps. Even within the Patrumin U.S. Smallcap Equity Strategy, we diversify our holdings to often include some companies below $1bb in market cap and also above $3bb.

*Diversification does not guarantee a profit or protect against loss in a declining market; it is a method used to help mitigate investment risk.

Q?Do you consider capital gains taxes** when investing and trading for client accounts?

At Patrumin Investors, we carefully review and understand the tax sensitivity of each client’s account. For taxable accounts we try to invest and manage as tax-efficiently as possible to minimize short-term gains and maximize long-term gains from a taxation viewpoint. That said, we would always rather take any capital gain if there is material, downside concern about any individual stock position.

**Patrumin Investors does not offer legal or tax advice. Please consult the appropriate professional regarding your individual circumstance.