Equity Investment Strategy

YHB Investment Advisors favors the ownership of stocks of high quality companies with a history of strong earnings growth and a corporate  management with demonstrated success in adding to shareholder value.  Our decisions are based on sound judgment from significant individual and collective experience.  Our selection process incorporates the following factors:

  • Research:  We rely on independent quantitative and qualitative research, viewing them as complementary elements in investment decisions.
  • Collaboration:  Our unique culture facilitates collaboration among the members of our investment team ensuring the best thinking is reflected in our portfolios.
  • Conviction:  Our independent research gives us the confidence to challenge consensus.  We have the courage to stand by our research convictions, even in the face of skepticism from “consensus thinkers” elsewhere.

Equity Style: Our equity strategy is to invest in leading companies in growing industries.  Although we recognize that the equity market tends to be efficient over time, we strive to gain advantage through disciplined stock selection and portfolio construction.  We seek to purchase the shares of companies at an attractive price/earnings-to-growth ratio.  This approach is often referred to as “growth at a reasonable price.”  Patience and a willingness to ignore the day-to-day fluctuations of the market most often result in the growth of principal over time.

Analysis Process: When evaluating a company for potential investment, we find it useful to deconstruct its value chain from suppliers to end markets.  This granular view of a company’s environment allows us to make judgments regarding a company’s expected growth and profitability.  We pay particular attention to the “quality” of a company’s revenue growth-its consistency, the degree to which it is recurring, and its ability to continue.  We also look for growth in free cash flow and earnings, as well as high returns on capital.  We then compare our conclusions to those implied by the stock’s valuation to make a judgment as to its appreciation potential.

Specialty Funds: In certain situations we employ no-load mutual funds and/or exchanged traded funds to supplement our holdings of individual equities.  They offer a low cost manner to achieve immediate diversification and access to a variety of investment strategies including exposure to small cap companies, international, or certain specialty sectors of the market (e.g., health care, technology, commodities, biotechnology, etc.).