The Essence of Superstar Investor David Giroux’s Investment Success

As Giroux celebrates the flagship fund's 20th anniversary, I asked him how his investment approach has evolved over two decades.

It's funny, when I started off in 2006 on cap appreciation, you know, in many respects, I was not prepared to take over the strategy.

I did not have an overarching strategy.

That was not something I had focused on.

Then we went through the great financial crisis.

I always think about, you know, a gentleman named Ferris Shugie, who is still here at T.R. Price, runs the T.R. Price Investment Management Quantic Quant Group.

Spent a lot of time with Ferris.

helped develop a kind of a strategy, invest in kind of lower EPS volatility companies that focus on management teams.

The focus on GARP as a inefficiency in the marketplace that was just really, really compelling.

We really started becoming kind of a GARP strategy kind of in 2010.

That's the same time we kind of started investing in Thermo Fisher.

That realization of how attractive GARP was We bought Pfizer, Thermo, Danaher, Revity.

We bought a lot of really great Garpy stocks, United Healthcare, that generate just incredible returns for the strategy over a long period of time.

If you look at the Garp universe, we can define the Garp universe however you want to look at it, but really from 2005, to kind of 2022, that GARP universe outperformed the market by about 400 bps a year with lower risk.

Figuring out that that was an inefficiency in the marketplace, figuring out that we should take a giant bet, you know, like a 2000, 3000 basis point overweight in GARP, that was a big driver of the alpha that we generate on the equity side.

And then on the fixed income side, trying to think about where is the best risk just returns in the marketplace.

It's not in mortgages.

It's not in long duration treasuries.

It's not in AAA.

It's actually in companies that are the high end of high yield, leveraged loans.

So we've been able to generate a lot of alpha on the fixed income by having a very different fixed income portfolio than a lot of peers.

And I think the last thing that I think of the portfolio strategies evolved is just a realization that, again, another market efficiency is that when the market falls and when a lot of investors get scared and take risk off, It's actually counterintuitive.

You should be putting more risk on.

When the market goes lower, the odds of losing money actually goes lower over a 12-month basis.

The expected return goes higher.