Know when to hold ’em, know when to fold ’em
The goal of our investment process at Dock Street is to find businesses we can own for long periods of time, allowing them to compound their profits at a high rate. The growing profits will find their way into the stock price, but when the growth slows, that shows up in the price as well.
For twenty years Factset, a provider of financial information to firms like ours, was a perfect example of what we hope to find. The chart below shows the price of that stock since 2002 with plenty of bumps along the way. But in 2023, we began to notice a slowdown in the business and in 2024 we sold the stock. (The circled area on the chart)
Factset continues to grow, but at a much slower rate and for that reason the stock has collapsed since we sold. We did not expect the collapse in price, but we did think that there were other companies that provided better prospects for growth.
We want to be patient as investors and avoid getting shaken out of an investment because of the short-term news cycle. But when the financial results hint at a permanent slow-down, or other forms of deterioration in the business, we need to move on.
Best regards,
Daniel A. Ogden
Dock Street Asset Management, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission. You should not assume that any discussion or information contained in this letter serves as the receipt of, or as a substitute for, personalized investment advice from Dock Street Asset Management, Inc.
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