At a Glance
Primary focus
Companies in structural growth markets with increasing cash generation power
Role in portfolio
Alpha generator & compounding engine
Typical weighting
20–35%
Risk/return profile
Higher volatility, highest expected long-term returns
Key characteristics
Rapidly improving FCF margins, scalable business models, large addressable markets
How This Segment Adds Value
- Asymmetric upside potential Early positioning in high-conviction structural trends
- Cash flow inflection Captures transition from revenue growth to profitability
- Scalability rewards Network effects and operating leverage drive margin expansion
- Active management alpha Dynamic position sizing captures inflection points others miss
Selection and Construction
- Quantitative screens Improving FCF margins, accelerating revenue growth, expanding TAM
- Qualitative filters Market leadership trajectory, execution track record, management alignment
- Position sizing Conviction-weighted 2–12%, 6–12 core positions
- Rebalancing triggers Inflection achievement / peak growth deceleration, competitive disruption
Why It Matters
- Future return driver Highest expected returns from successful compounding machines
- Portfolio asymmetry Limited downside from quality filters, uncapped upside
- Active skill expression Where security analysis and timing create differentiated alpha
- Strategic growth engine Powers overall portfolio returns while maintaining risk control