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Profile of the Partnerships – Summary
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While the premise on which the Framework is built is sound indeed, it is the ability of the investment manager to implement the Framework and to use it that makes all the difference.
Investment Framework described the investment philosophy and major premises the Framework is based on. Here, in the Profile of the Partnerships, we describe the evolution of the Framework, the actual process of implementing and using the Framework, and the results of twenty years of its use.
The philosophical underpinnings of our Framework have never changed. Its implementation, however, has undergone several revisions with the purpose of honing the investment process and separating the essential and long-term tenets of the Framework from the temporal and unessential. These revisions are always undertaken with the goal of simplifying the resulting investment process.
The investment process as implemented at VCM forces a constant comparison of holdings in our portfolios with other companies which we monitor. This successfully diminishes the tendency, present in all investors, to hold on to a portfolio company independently of its current investment merits as compared to another monitored company.
On the other hand, the goals of tax efficiency and of minimizing the risk of introducing a lesser known company into a portfolio have to be balanced against this tendency of an investment manager to hold on to a winner in the hope of extending a winning streak, and to hold on to a loser in order to avoid facing the acknowledgement of a mistake or bad luck.
Tuning this process, with the contradictory requirements imposed on it and with possible biases introduced by the investment manager, takes the ultimate investing experience. The ability to tune this process successfully is the mark of a good investment manager.
Past returns, described in detail in this Profile, put VCM at the very top of investment managers for the past twenty years. Thus, both VCM Investment Framework and our implementation of this Framework have proven to be solid, and have yielded outstanding results.
The process used in managing all VCM partnerships is essentially the same but the parameters defining the partnerships, such as level of debt used, influence this process. The principal difference between the two partnerships is in the use of debt: VEP uses debt and VEP II does not. VEP II is intended for those investors who prefer lower volatility and are willing to accept lower returns, in particular, for investing retirement (tax-deferred) assets.
Turnover of the portfolios is usually below 20%. The portfolios are usually fully invested, with partnerships expenses and tax obligations of the partners monitored with the goal of minimizing them.
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Content
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Profile of the Partnerships document provides a comprehensive review of most aspects of our Partnerships.
This document covers the following areas:
1. Past Returns
2. Repeatability of Returns
3. Investment Process
4. Investing in High-Technology
5. Concentration
6. Strategy on Long and Short positions
7. Analysis Methods
8. Volatility and the Degree of Volatility Depending on the Partnership
9. Independence of Decision Making
10. Commitment to Limited Partners as Expressed by a Significant Manager’s Investment
11. Positioning and Performance compared to Hedge Funds and Private Equity Funds
12. Positioning and Performance compared to Mutual Funds
13. Positioning and Performance compared to Managers of Separate Accounts
14. A Summary of Reasons to Invest with VCM
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Profile of the Partnerships – In Depth
This document captures a picture, as of a certain time, of the partnerships run by VCM. This picture will change: the implementation of our Investment Framework undergoes constant improvements, partnerships are added, VCM’s performance standing among competitors changes due to competitors’ and VCM’s changing performance, and the underlying Investment Framework may change, albeit very slowly.
Your common sense and our Cautionary Statement and Disclaimer should help you to form an opinion about the VCM partnerships without assuming that they will not change.
Access to this 20-page document is restricted and requires access privileges, see How to Access the Site if you are not familiar with the access rules for this site.
Please Click here to see the document.
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