Actively-Traded Public Markets Investing

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Efficient Alpha Capital’s portfolio of actively-traded stocks is focused on companies with the following characteristics:

  • Potential to double Gross Profit in the next 3-5 years, primarily driven by 20-30+% annual revenue growth
  • Recurring or highly re-occurring revenue model with low customer attrition
  • 60-70+% Gross Margins
  • Evidence of operating leverage
  • Positive Free Cash Flow characteristics
  • Large / growing addressable market
  • Proven customer acquisition economics

EAC has developed a valuation methodology to apply to companies that meet the above criteria, in an effort to identify stocks that are at lower risk for severe multiple contraction. The orientation for this strategy is very much long-term in nature, with the expectation of multi-year holding periods for each investment.

The “efficient” element of this strategy is built on the logic that the qualities of a company that normally require significant effort to diligence — capabilities of the management team, quality of the product, competitive positioning, etc. — are indeed largely self-evident if a company has been able to achieve the fundamental financial characteristics described above. Therefore, Efficient Alpha Capital has been able to construct and manage its stock portfolio in a way that is significantly less resource-intensive when compared to hedge funds or other similar actively-managed public market strategies.

Disclaimer: Efficient Alpha Capital LLC is not registered as a securities broker-dealer or advisor either with the U.S. Securities and Exchange Commission or with any state securities regulatory authority. Efficient Alpha Capital LLC does not recommend the purchase of any stock or advise on the suitability of any trade / investment. The information presented herein is generic in nature and is not to be construed as an endorsement, recommendation, advice, or any offer or solicitation to buy or sell securities or any kind, but solely as information requiring further research as to suitability, accuracy, and appropriateness.

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