Core Beliefs

Industry experts tell us that the investment world, as we know it, has changed, as have the general philosophies that govern strategies in the global capital markets. The impact of an economy fueled by declining interest rates has seemingly pounded the final nail in the coffin of traditional buy and hold investing. In fact, many market-minded economists and portfolio managers have deemed the past ten years the lost decade or the end of traditional equity investing as we know it. Many are surprised by the lackluster performance of the DJIA or the S&P 500 over the period 2000 to 2008, including some of America’s brightest investment minds. And, they don’t blame the investments, but the underlying philosophies of asset allocation, portfolio construction and long-term investing. It seems the time has come for a new breed of asset managers. We believe asset managers should be judged on the ability to manage assets and produce results – compensation should be determined by fund performance rather than fund size. Traditional managers are now looking for skill-based execution and accountability from those who actually drive investment performance. We are unique. We stand behind our performance. We provide institutional and accredited investors with disciplined, performance-based management. We operate in a fully-transparent environment and delivering consistent returns. We are Palo Verde Capital.

What does it mean? Delivering performance is what matters and delivering results in challenging markets is paramount. Expenses and manager’s fees can be a monumental drag on performance and should never be just a footnote in a prospectus. We take issue with inefficient funds, excessive compensation and lack of accountability. Firms with a history of prospering while investors suffer will eventually be held accountable for their performance, or lack thereof. The real enemy is traditional thinking – by traditional investment firms and asset managers. They sell size, tradition and the ability to fire managers that don’t perform. Mostly, they tell you about the financial success of their firm, rather than the success of their investors. Modern Portfolio Theory, efficient frontiers, and the inverse correlation between stocks and bonds have been proven to be less reliable in turbulent markets. Portfolio construction and buy and hold investing will likely never be the same. We are philosophically different. We’re not advisors. We provide institutional and accredited investors with disciplined, performance-based management. We operate in a fully-transparent environment delivering consistent returns.

We were established in 2008… and that’s important. The year 2008 marked a dramatic shift in the investment world. The foundation of portfolio management was turned upside down and investors began demanding a new line of thought. With this vision in mind, Palo Verde Capital was founded. We are not shy about being founded in the year of change, in fact, we are proud of it. Palo Verde Capital was founded by skill-based asset managers to specifically address the new era of portfolio construction and alpha generation. We don’t advise, we perform and deliver. Skill-based performance and alpha generation have become the buzzwords for portfolio construction and management. Institutional “alternative” allocations of 3% – 6% have been replaced by allocations of 20% – 50%. Disciplined, skill-based managers have become the calling card for investors demanding change. “Set it and forget it” no longer works. Investors want unconstrained strategies in search of alpha generated returns. And this is what we do best at Palo Verde.

Where are we today? Palo Verde Capital reached the $200mm threshold in January 2011. We don’t believe in relative returns. Our mission is to maximize returns to our investors. Every conversation we have starts with the discussion on how will it help us deliver superior returns with maximum efficiency to our investors. If it doesn’t enhance our ability to perform, we won’t do it. Finally, we have been a fully reporting firm since our inception. We don’t tout transparency as a unique qualifier. In fact, we believe it is the minimum requirement for anyone who manages assets. We believe bigger is not always better when it comes to managing risk, driving performance and delivering returns. Our success will be defined by client satisfaction, not Wall Street recognition. We deliver… Consistent. Absolute. Performance.