Beyond Fundamentals: Taking A Deeper Look at Credit Risk
Why there is often more to the story than agency ratings suggest
Approach
Equity Investment Philosophy
We invest in companies worldwide with attractive earnings growth, driven by a sustainable competitive advantage, financial strength, proven management teams and powerful products or services. Investing in only what we believe to be the best companies with long-term staying power supports our ability to deliver outsized returns and minimize risk.
We believe consistent earnings growth is the primary driver of intrinsic value and long-term stock appreciation. Accordingly, our efforts focus on identifying and then building concentrated portfolios of companies that we believe are capable of delivering sustainable, above-average earnings growth.
- Our long-term holding strategy is underpinned by a belief that short-term fluctuations may not reflect the true value of the underlying business and the return of the share price will match the growth of the earnings.
- We believe that attractive earnings stability and financial strength serve as a margin of safety that typically results in less volatility during declining markets.
- Our focused approach is about investing in businesses around the world that we believe have an ability to compound their earnings year after year rather than merely hugging an index.
High Yield Investment Philosophy
We strive to generate attractive risk-adjusted returns by employing a disciplined, bottom-up, fundamentally-oriented investment process with a strict adherence to downside protection. Through rigorous due diligence with a strong emphasis on margin of safety, we believe that we can construct concentrated portfolios that can outperform broad high yield indices over a full credit cycle.
- We focus on identifying mispriced risk within the inefficient segments of the high yield market, where rating agency biases may create opportunities for discerning investors.
- Our focused coverage and long-term mindset enables our team of sector specialists to dedicate significant time and effort to monitoring existing investments and managing downside risk.
- We assess risk-reward through “loan-to-value” analysis and perform thorough legal due diligence, which is augmented by our in-house transactional attorney.
We are committed to pursuing a high conviction strategy designed to add value and grow the assets of our clients over the long-term.
—Damon Ficklin, Head of Team, Portfolio Manager & Analyst
Extending Our High Conviction Strategy
All Polen investment teams operate autonomously and maintain a concentrated, disciplined investment approach.
Our flagship Focus Growth strategy launched in 1989. We added to our Large Company Growth strategies with Global Growth in 2015 and International Growth in 2016.
In 2017, we established our second investment team —Small Company Growth —and launched the U.S. Small Company Growth strategy, followed by International Small Company Growth in 2019, U.S. SMID Company Growth in 2020, and Global SMID Company Growth in 2021.
In 2020, we added Emerging Markets Growth as our third investment team and launched our Emerging Markets Growth strategy. In 2022, we launched the Emerging Markets Growth ex-China strategy. Broadening our emerging markets expertise in 2023, we integrated the LGM Emerging Markets and China Equity investment teams and expanded our franchise to include six strategies.
In 2022, we extended our capabilities into High Yield by acquiring DDJ Capital, welcoming our fourth investment team to Polen. The team’s flagship U.S. Opportunistic High Yield Strategy was incepted in 1998.
Related Perspectives
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Polen Global Growth portfolio manager Jeff Mueller shares his view on unique quality growth investment opportunities around the world
Small Caps: Resilience & Agility Amid Uncertainty
We believe high-quality small caps have what it takes to emerge even stronger from a challenging environment
Our centralized compliance, trading, distribution, marketing and technology teams all work together to support our investment process and the investors we serve.
We are interested in a company’s viewpoint and best practices for sustainability which complements our long-term approach.
The information provided is for informational purposes only. Opinions and views expressed constitute the judgment of Polen Capital, may involve a number of assumptions and estimates which are not guaranteed, and are subject to change without notice. Although the information and any opinions or views given have been obtained from or based on sources believed to be reliable, no warranty or representation is made as to their correctness, completeness or accuracy. Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice, including any forward-looking estimates or statements which are based on certain expectations and assumptions. The views and strategies described may not be suitable for all clients. References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations. This document does not identify all the risks (direct or indirect) or other considerations which might be material when entering any financial transaction.