Insights from SWS Partners

The following is an excerpt from our recently published SWS Growth Equity 3Q2021 strategy update, which is available in its entirety via pdf or audio stream. In the full piece, we provide our take on sifting through an increasingly volatile equity market backdrop, while assessing the strategic merits of our internally managed strategy for public growth-style equity.

Our read of the current fundamental signals continues to support that 2021 will be a grind-out period for active return generation. This in large part is due to a global macro dislocation that caused the most dramatic acceleration of digital transformations across all industries. The market is still undergoing a massive sortation of flash-in-the-pans from sustainable share-gainers as we edge closer to a post-pandemic environment. As active equity managers tasked with relative value creation, we remain optimistic on how our investment process is calibrated to generate attractive risk-adjusted outcomes in this backdrop.

The following is an excerpt from our recently published SWS Growth Equity 2Q2021 strategy update, which is available in its entirety via pdf or audio stream. In the full piece, we provide our take on sifting through an increasingly volatile equity market backdrop, while assessing the strategic merits of our internally managed strategy for public growth-style equity.

In this latest installment of our quarterly accountability check-in, we assess an important milestone that gets to the core justification for launching SWS Growth Equity. Having honed an investment process inside a $100 billion dollar pension, we identified the opportunity to combine stock-picking acumen with risk-minded portfolio construction, then unveiling this to a much wider audience. This past May marked three years since we planted our flag with investment capital, including our own alongside external investors. We dive into the output of our efforts below, but our focus will always be on a universal goal of every public equity investor. Despite various ways it’s articulated, consistent risk-adjusted returns are at the core of every investor’s pursuit.

As we continue to emerge from the pandemic we are again provided with an opportunity to revisit existing ideas in a new and fresh way.  The most recent stress test of the economy, markets, and ourselves delivered by the pandemic of the past 15 months shouldn’t be wasted, particularly when it comes to equity investing.

With the “recovery shape” guessing game firmly in the rearview (happy to say goodbye to whether “K-shaped” should join ranks of “V-” and “L-shaped” in the economist vernacular), the YTD period is evidence of the difficulty in pricing future outcomes at this particular market juncture. Companies lifting the hood to their recent quarter’s results are doing so at a time when the year-ago snapshot captures one of the most precipitous drops in public markets history. Trying to level-set our true run-rate, while simultaneously deciphering what’s next for equity investors, seems to be an effort stuck in “work-in-progress” mode. As we head into the holiday weekend, we saw the opportunity to offer some food for thought to accompany that which is earmarked for the grill or cooler, all in the effort to help illuminate our path forward as equity investors.

The following is an excerpt from our recently published SWS Growth Equity 1Q2021 strategy update, which is available in its entirety via pdf or audio stream. In the full piece, we provide our take on sifting through an increasingly volatile equity market backdrop, while assessing the strategic merits of our internally managed strategy for public growth-style equity.

After enduring a year of drastic outcome disparities in public equity, we're reminded of an often-misconstrued aspect to large cap investing. The asset class tends to garner perceptions that higher "efficiency" translates into an inability to generate sustainable and attractive returns, either relative or absolute. The cited culprits range from a disproportionately higher amount of sell-/buy-side analyst eyeballs, deeper pools of liquidity, tighter bid/ask spreads, or name-brand awareness by investors among the blue chips. The embedded implication behind these factors is that large-cap cash flows are somehow easier to predict than that of more obscure or smaller cap issuers.