Cutting The Flowers, Watering The Weeds?
The share price is plummeting. Well, at least that means “the problem” in my portfolio has become smaller. Let's shove this position into the corner of forgotten things. Quickly think of another stock that is up 20%. I can take profits. There, that feels better already. At least for now.
Does this sound familiar? Watch out, if this becomes your default mode, you’re headed for trouble. Or in this case, in a garden full of weeds and cut flowers. Because we deprive ourselves of the most beautiful plants while letting the dry undergrowth take over.
At Gutmann, we take exactly the opposite approach. Is a stock’s poor performance just a temporary drought? Then buy more, quickly - new blossoms are sure to follow. If the business model proves unsound, we’re better off cutting our losses.
Avoiding concentration risk
The right discipline is already built into the Gutmann Core Equities strategy’s DNA. By equally weighting the individual stocks, we never allow any single holding to dominate the portfolio, avoiding concentration risks. Four times a year, we restore this equal weighting through active buying and selling. Anti-cyclical trading is therefore virtually automated. Stocks that have wilted a bit in recent months get watered with fresh capital. And stocks that have outgrown the others are carefully trimmed back.
Take the high-flyer Nvidia, for instance. In recent months, we have taken more profits than we have currently invested. As a result, the portfolio remains balanced and well-diversified across themes and stocks.
When a stock really comes under heavy pressure, our equities team doesn’t just look the other way. You know, looking the other way when the share is only a small position in the portfolio. That’s not an option for us! We must decide: Either restore it to its target weight or sell it completely.
Faith in the future
This was our situation with Insulet, a medical device company in the diabetes sector. The share price halved in 2023. In a situation like this, every stone is turned over, because we must either renew our conviction in the business model or throw in the towel. In this case, we doubled the position. And to this day, that’s proven to be the right call.
Granted, things could have gone differently. But in the long run, what matters is discipline and the courage to make active decisions. This is the only way to generate added value. Of this, I’m convinced.
Past performance is not indicative of future returns. Forecasts are not necessarily indicative of future results.
Due to the composition of the portfolio and the used portfolio management techniques the Gutmann Core Equities under certain circumstances can show an increased volatility, i.e. the value of units may be exposed to high up- and downturns within short periods of time.
Further Information on the main risks of the Fund can be found in the Key Information Document ("PRIIPs-KID") as well as the prospectus or the information for investors pursuant to Article 21 Act on Alternative Investment Fund Managers (AIFMG - Alternatives Investmentfonds Manager-Gesetz) under the item "Risk profile of the Fund".
The fund pursues an active management strategy without reference to a benchmark.
All figures made without guarantees. Errors and omissions excepted.
For interested parties the Key Information Document (“PRIIPs KID“) in accordance with the Regulation (EU) No 1286/2014 for Gutmann Core Equities respectively the prospectus in accordance with section 131 InvFG for Gutmann Core Equities in their current versions are provided in German language free of charge at Gutmann KAG and Bank Gutmann AG, both Schwarzenbergplatz 16, 1010 Vienna, Austria and on the Website www.gutmannfonds.at as well as for Gutmann Core Equities at the German information center Dkfm. Christian Ebner, Attorney at Law, Theresienhöhe 6a, 80339 Munich . The distribution of fund units was notified to the German Federal Financial Supervisory Authority (BaFin). Gutmann KAG may de-notify the distribution of funds in Germany as far the conditions according to Art 93a of Regulation 2009/65/EG are fulfilled.
Further information on the sustainability-relevant aspects of the Fund can be found at www.gutmannfonds.at/gfs.
This information has been created by Bank Gutmann AG, Schwarzenbergplatz 16, 1010 Vienna. Bank Gutmann AG hereby explicitly points out that this document is intended solely for personal use and information. Publishing, copying or disclosure by any means whatsoever shall not be permitted without the consent of Bank Gutmann AG. The contents of this document have not been designed to meet the specific requirements of individual investors (desired return, tax situation, risk tolerance, etc.) but are of a general nature and reflect the current knowledge of the persons responsible for compiling the materials at the copy deadline. This document does not constitute an offer to buy or sell nor a solicitation of an offer to buy or sell securities. Information to investor rights are available on the website www.gutmannfonds.at/gfs and are provided on request in German language at Gutmann KAG and Bank Gutmann AG.
The required data for disclosure in accordance with Section 25 Media Act are available on the following website: https://www.gutmann.at/en/imprint.
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