Dakota started working with Edgewood Management in 2006 when their mutual fund launched with approximately $25 million in assets and the firm AUM was approximately $3 billion (as of 12.31.2006). Edgewood has been a fantastic firm to work with which has allowed us to help scale their mutual fund to over over $16B and firm AUM to over $31.9B (as of 3.31.2023).
You can visit Edgewood’s website for more information, or visit Edgewood on Dakota Pages and view current and historical documents.
Edgewood Management is a concentrated U.S. large cap growth manager based in Greenwich, Connecticut, with a second office in New York City. Edgewood was founded in 1974 as a family office and remains 100% employee owned, managing $31.9 billion in assets*, with the strategy available via SMA and a mutual fund.
The firm is singularly focused on the 22-stock large cap growth portfolio. The investment team consists of six Portfolio Managers, three Senior Analysts and between two - three Junior Analysts. Four of the six Portfolio Managers have been managing the strategy together for over 20 years, with two additions to the team in 2006.
There has been no turnover at the Portfolio Manager level since 2006.
All decisions are made as a team with a clear focus on managing risk at every level of the process. Philosophically, the team seeks to own the 22 best businesses based on their deep fundamental research, buy them at the right price, then allow the companies to compound earnings to drive long-term performance.
*As of March 31, 2023
The Edgewood Large Cap Growth strategy is a fixed 22-stock portfolio, which means that for a new stock to be added to the portfolio, one must be sold. This discipline challenges the team’s conviction level in every single stock, and forces them to make difficult decisions when it comes time to decide on what to sell. Edgewood focuses exclusively on businesses it deems high quality with strong financials, high margins, and barriers to entry managed by world class management teams.
The strategy is balanced across three distinct buckets of growth; the team limits exposure to sectors to 25% and caps position sizes to any given stock to 8%. The portfolio is conviction weighted between 2-8% with the largest weightings representing those stocks that offer the highest margin of safety based on the team’s discount to present value assessment.
The end result is typically a high active share, low turnover, quality growth strategy that tends to do best in low to moderate GDP growth environments typically associated with the middle to later stages of an economic cycle when there tends to be a greater appreciation for a company’s fundamentals, like clean balance sheets, durable growth rates, and cash flow. The strategy is often used as an alpha seeking satellite to a core index or passive ETF.
The investment team is experienced (each PM has over 30 years of investment experience), highly collaborative, and aligned with investors. The investment team has always been very accessible, transparent and humble. There is a unique drive for the team to perform, and that starts with the culture that Alan Breed and the Partners have created and refined over decades.
Deep, fundamental research of a limited number of stocks allows the team to know their companies inside and out. Edgewood is only willing to accept the business risk that they can analyze.
Managing risk is the key to Edgewood’s long-term success and track record. From the unanimous vote to buying a new stock, the reassignment process if a stock is performing poorly, the equal weight across growth buckets, the individual stock and sector constraints, etc. — it all connects and has been carefully designed to control risk and limit emotion and subjectivity in the process.
If you would like to learn more about Edgewood and/or speak with a Portfolio Manager, call Dan DiDomenico at (610) 937-5211 or email at email@example.com.