Risk Hedging Strategy
Because our primary objective is capital protection, PVG employs a multi-level risk management approach. Security risk is handled with fundamental and technical price targets, along with stop loss orders. Market risk is managed by allowing cash to rise when attractive alternative investments are not available.
In addition, PVG manages market risk by hedging portfolios at market extremes and during periods of high market volatility. We do this primarily with inverse exchange traded funds. Only broad market index funds are used and our goal is risk reduction not maximizing returns. Portfolios are never net short.
Security Selection Process
PVG’s investment process involves extensive internal and external research to identify opportunities from among thousands of alternatives. We employ a thematic approach to sectors and corporate selection without capitalization or geographic distinction. Technical screening and buy/sell triggers are important.
Typical holdings have sustainable revenue growth with the possibility of improving returns on capital and are self-financing. We construct portfolios of 30-50 securities with reasonable valuations, and attractive risk/reward relationships based on technical characteristics. Holdings typically have price targets.
Our sell discipline is important. Holdings have price targets and are sold when the value of company exceeds our estimate of value, because of corporate fundamental and or technical deterioration, and because market conditions dictate greater loss aversion.
