The Broadleaf Growth Equity Portfolio (BGEP) enjoyed a very strong third quarter in absolute and relative terms, enabling it to catch up and surpass the S&P 500’s returns on a year to date basis after lagging for the first half of the year. While no single quarter establishes a trend, the results are a clear reminder of how volatile and unpredictable the pattern of stock market gains can be and a warning against radical short term moves by those with long term investment horizons.
As we mentioned in our last quarterly update, investment managers, like baseball players, go through occasional slumps. As long as you haven’t given up on our investment process or your ball player’s inherent athletic ability, slumps can prove to be among the most rewarding of buying opportunities. The third quarter proved to be just such a case.
At the same time, money managers, like ball players, can also have hot streaks. Selecting and hiring an investment manager on the basis of short term results alone – the good, the bad, or the ugly – is tantamount to judging a book by its cover. While it is exciting to see the Cleveland Browns at 2-2 and the Pittsburgh Steelers at 0-4, the question of sustainability can better be answered by looking at how the fundamentals of the game are being played.
If you have hired us and simply trust us to do our job, please know that we appreciate your confidence and don’t take it lightly. At the same time, an educated client is always the best client. The better you understand our investment process, how we think, and how we invest, the better, we believe, your experience with Broadleaf Partners will prove to be.
We share our periodic thoughts in Economic Updates not because we think we have to or because it is a good marketing move, but because we really do put a lot of thinking into how we see the world and accordingly, how we invest the money with which we’ve been entrusted. Performance is, of course, what we sell, but process is how we get there.
For details on our firm’s performance results, our investment outlook, and related disclosures, please read the attached Performance Review.