Markets are short-sighted by nature. Prices move daily, driven by earnings, macro headlines, and sentiment shifts that have little to do with the long-term trajectory of a business. That noise drives short-term reactions, but we rely on patience.
Our approach is simple: we care about where a business is going, not just where its stock price is today. Revenue growth is one of the purest indicators of customer demand and business health, and earnings and cash flow follow. The factors that drive shareholder value play out over years, not just a single quarter. Holding that view requires conviction that short-sighted investors can be unwilling to follow through on.
Investors typically think about risk as the probability of losing money. We think there’s another side to risk that is underappreciated: the risk of missing a significant wealth creation opportunity. Both are real and both are costly; managing only one of them is not enough.
That framing changes how we ask questions. Rather than focusing on what could go wrong, we focus on what could go right. We evaluate every investment on a five-year horizon, which we believe is long enough to let a great business prove itself and overcome the noise that can dominate short-term thinking.
We start by evaluating thousands of companies. We narrow that list through deep, ongoing research into financial and non-financial growth drivers, upside and downside scenarios, and a deep understanding of what makes a business durable. What remains is a portfolio where each holding is held with high conviction.
The companies we are drawn to are often led by visionary founders who are challenging norms and building something that doesn’t yet have a clear comparable. We believe the market can misprice these businesses because it is focusing on the wrong horizon. When sentiment turns and prices fall, the short-term reaction can be quick. We have learned that these moments can be opportunities rather than decisions.
We’ve held through moments when a company’s stock fell sharply on a strategic misstep, trusting our read on management and the long-term opportunity over the short-term reaction. Our confidence in management teams and their ambition to grow companies compels us to hold through the short-term volatility.
During seasons of heightened market or single stock volatility, we work to take a step back from the noise and hone our focus on the long-term and our confidence in management teams.
Companies that look obvious in hindsight also survived tumultuous moments. Many of the companies we have held for a decade or longer over our history have experienced meaningfully drawdowns of 50% or more. These were not comfortable moments, but discomfort and permanent impairment are not the same thing. Volatility carries risk, but given the right time horizon, it can also present opportunity.
Our typical annual turnover is well below peer average which reflects our philosophy well. We sell when our analysis indicates a lasting decline in a company’s fundamental growth potential, not solely due to a stock’s downturn, market anxiety, or disappointing quarterly results. The criteria for exiting a position are identical to those for entering: the business itself.
We believe that the work of identifying whether a business is fundamentally flawed or simply misunderstood creates edge in growth equity investing.
A longer horizon, aligned with our clients, can create an advantage.
Investing in securities involves the risk of loss. Past performance is not a guarantee of future results. The securities identified and described do not represent all the securities purchased, sold, or recommended for clients’ accounts. The reader should not assume that an investment in the securities identified was or will be profitable. This material is intended for general informational purposes only, and should not be construed as legal, tax, investment, financial, or other advice. It does not consider the specific investment objectives, tax and financial condition or needs of any specific person. This content is developed from sources believed to be providing accurate information. While reasonable care has been taken to ensure that the information herein is factually correct, Zevenbergen Capital Investments makes no representations or guarantee as to its accuracy or completeness. The opinions expressed herein are subject to change at any time without notice.
