What is the Buy–And-Hold Growth Partnership?
The
Buy-And-Hold Growth Partnership is a registered partnership that was officially
formed in December of 1999. It invests its partners’ money in stocks for the education
and benefit of the partners. The goal
of the partners is learn how to effectively select companies for investment,
and to outperform the market as measured by the S&P 500 index. Since its
inception, The Buy-And-Hold Growth Partnership has grown both in terms of the
number of partners and in dollar amount of assets. No investment background is necessary to join the Buy-And-Hold
Growth Partnership.
How does the Buy-And-Hold Growth Partnership work?
The Buy-And-Hold
Growth Partnership partners meet once a month. The partners make monthly
capital contributions into the partnership. The money is pooled and used to
invest in companies as agreed by the partners.
Each month stocks are screened
to identify potential investments; F8-screened companies are graded, all screened companies are compared to peers by business performance,
valuation, cash strength, and management effectiveness. Each partner is an owner of a percentage of
the Buy-And-Hold Growth Partnership based on what he or she invested. The
partners make investment decisions based on the percentage of ownership.
Partners may withdraw their capital account as specified in the Partnership
Agreement.
Screen BHGP subscribes to a monthly database of information on all
publicly traded U.S. companies (Stock Investor-Pro from the American
Association of Individual Investors).
This database is screened:
1.
for high potential growth companies
(F8) using concepts derived from The Motley Fool’s Foolish Eight small cap
investment strategy. The screen considers:
relative strength, price, daily dollar volume, sales growth, earnings per share
growth, sales, net margin, insider ownership, cash flow, and cash from
operations.
2.
by sector when a given industry looks
promising or when an increased exposure in a sector is desirable.
3.
by market cap when the market cap
distribution of BHGP holdings is imbalanced.
Grading. The companies that pass the
F8 screen are then graded according to Eric Eason’s small cap grading
scheme. This scheme rates the sales
growth rate, inventory growth rate, accounts receivable growth rate, gross
margin, and cash-to-debt ratio, using all five ratings to develop an overall
rating for the company.
Comparison All screened groups are compared by business performance
and valuations.
BHGP’s business performance report graphically displays 8
quarters of financial data including: sales, profits, net income, gross
margins, money management, cash:debt.
BHGP’s valuation report is a comparative display of 8
quarters data on two companies: valuations (price/earnings, price/sales,
price/cashflow, price/free cashflow), cash strength (quick ratio, current
ratio), management effectiveness (ROA, ROE).
BHGP
bylaws prescribe a balanced investment portfolio, allowing no more than 25% of
assets in any single market sector.
Further, BHGP strives for a uniform distribution of investments
according to market capitalization.
How do I become a partner in the Buy-And-Hold Growth
Partnership?
The Buy-And-Hold growth Partnership
looks for individuals interested in investing. We feel the success of the
partnership depends on the willingness of its partners to contribute their time
and talent, as well as their money. Thus, our Partnership Agreement states that
additional partners may be admitted only upon written request and unanimous
consent of the partners, so long as the number of partners does not exceed
fifteen (15). If you feel you could add
to the partnership, please feel free to come to a monthly meeting. If you have
any other questions, please contact our President.
The mission of the Buy-And-Hold Growth
Partnership is to invest the partners’ money using a long-term approach in
stocks with the goal of maximizing return while managing risk and for the
education and benefit of the Partners.
·
To educate all partners in areas of investing and the stock market. If we win, our partners win. If we lose, our partners lose. Either way, our partners will increase their
knowledge of the markets for the future.
·
To beat the general market as represented by the S&P 500 Index. This
objective is derived from the fact that most professional money managers fail
to beat the S&P 500. Thus, if the Buy-And Hold Growth Partnership beats the
index, we outperform most professional money managers.