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APS’ portfolios are “alpha diversified” for optimal alpha generation
Every stock in our portfolios is classified under 1 of 4 alpha groups:
- Structural alpha stocks possess structural strengths and/or core competencies and will likely outperform over the longer term. The investment horizon is normally more than 3 years.
- Dynamic alpha stocks are subject to cyclical factors such as troughs and peaks in sectors such as semi-conductor, property and airlines. The investment horizon is about 2 years.
- Economic alpha stocks are undervalued; they have a healthy earnings growth rate yet trade at a large discount to intrinsic value. The investment horizon is 1-3 years.
- Opportunistic alpha stocks are experiencing special events such as restructuring, product repositioning, mergers and acquisitions, etc. The investment horizon is relatively short, at 6-12 months.