Led by CIO Robert Draper Jr. Draper Asset Management has built a proprietary portfolio of securities through internal research strategies described below:
Inside every annual report is a company's mission statement on how they are going to change the world. While this is an ambitious goal, and the epitome of the American dream, the reality is that very few companies actually “put a dent in the universe” as Steve Jobs famously referred to for Apple's Innovation.
Our goal at Draper Asset Management is to find the companies that are in position to become market leaders. We aim to bring our clients along for the journey and focus on three key factors for success:
- Does the company have a unique story?
- Is there strong leadership in place?
- Is the company financially accountable to shareholders?
Story
To be an organization capable of instituting positive change, they must differentiate themselves and provide consumers with products and services that change their lives in ways they didn't know were possible. Much as Apple has done with the iPhone, or Google with search, we seek to find companies that bring individuals and businesses essential products or services so cataclysmic that the economy after its creation is disrupted indefinitely.
Leadership
A company is only as good as those who are in charge of running it. We seek out CEOs and founders that have a strong ambition for both growing their companies and being as friendly to the shareholders as possible in the long term.
We seek to stay away from leaders who focus too much on short term gains, as well as CEOs who don't truly understand what their product is or what makes it so special. While it does not strictly have to be a founder in charge, the CEO must have long term value creation as their main priority, and cannot deviate from the vision.
Accountability
Covering both accounting and capital allocation strategy, we study whether those in charge of their companies are innovating towards that “dent in the universe”. We first make sure that the mission the company lays out is the same story laid out in the financial statements.
When management speaks of a main focus on growth and expansion, we look for the top and bottom line to be on the same page. When a company speaks of profitability, ancillary spending and gratuitous bonus payouts shouldn't be buried in the back pages.
As to capital allocation, we look for companies that are already in a position to be long term free cash flow rich. From that point, it is very important that management does right by its long term shareholders.This could be in the form of buying back stock as opposed to diluting, paying out a dividend if possible, or the choice between strategic acquisitions and paying off debt to best position the company long term. We understand the importance of these decisions and strive to align ourselves with leadership that can
We examine both the top and bottom line, taking a strategic approach to how profitability, ancillary spending and gratuitous bonus payouts will impact the shareholder and ultimately, our customers.
