PENCE Capital Appreciation SMA

 The Pence Capital Appreciation portfolio seeks long-term growth of capital. It aims to achieve this objective through a portfolio consisting of a minimum allocation of 80% US domestic companies and a maximum of 20% to foreign equities. These companies are relevant to the firm’s theme of disruptive technologies and put consumer behavior at the center of the process. 

Pence’s investment process begins with looking at Big Knowable Themes from changing consumer behavior to technological innovations. Pence Capital Appreciation is a growth-oriented portfolio that is focused on investing in high-quality companies with strong growth potential. The portfolio aims to achieve long-term capital appreciation by identifying and investing in companies that demonstrate robust financial health, innovative capabilities, and competitive advantages. The portfolio utilizes between 40 and 60 individual companies. 

  • Pence’s investment process begins with looking at Big Knowable Themes from changing consumer behavior to technological innovations.
  • It seeks to identify businesses that will likely grow their market share as the economy evolves.
  • The portfolio utilizes between 40 and 60 individual companies varying from 1% to 7% weighting with market cap over $10 billion and projected sales over $1 billion.
  • The portfolio has two components: Growth and Value.
  • Growth component can vary from 50% to 100% of the portfolio and consists of companies that focus on their top line growth in a double-digit rate.
  • Value component can vary from 0% to 50% of the portfolio and consists of companies that focus on their bottom line growth at a consistent pace.
  • Standard allocations in this composite are generally up to 100% equity and up to 2% cash.

KEY FACTS

Inception Date
09/30/2019
Cusip
Assets (Millions)
$14.8
Morningstar Category
Large Growth

Country Mix % of Portfolio
United States 87.0%
Non-US 11.1%
Fixed Income 0.0%
Cash 1.9%

 

Sector Breakdown % of Portfolio
Information Technology 46.1%
Consumer Discretionary 14.0%
Communication Services 15.7%
Financials 7.0%
Consumer Staples 7.5%
Health Care 6.2%
Industrials 3.6%

Market Capitalization % of Portfolio
Over $100B 97.1%
Over $50B but under $100B 2.9%
Under $50B 0.0%

Equity Mix % of Portfolio
Growth 71.1%
Value 10.0%
Blend 17.0%

GROSS RETURNS

TOP INDUSTRIES

Name
Portfolio %
Semiconductors
22.0
Software
16.9
Interactive Media & Services
10.0
Broadline Retail
8.7
Financial Services
5.4
Other Industries
37.0

TOP HOLDINGS

Name
Portfolio %
Nvidia
6.24
Microsoft
5.40
Alphabet
4.97
Amazon
4.81
Apple
4.79
Meta
4.72
AMD
4.25
Broadcom
4.21
Tesla
4.08
MercadoLibre
3.93

KEY METRICS

Name
Portfolio
Portfolio Indicated Yield (%)
1.17
Number of Stock Holdings
42
Weighted Average Mkt Cap ($B)
1,259
Median Market Cap ($B)
311
Price/Earning (12mo Trailing)
33.72
Fwd PE Ratio (12mo Forward)
25.62
Price/Sales
5.12
Price/Book
9.06
Price/Cash Flow (12mo Trailing)
23.43
Long-term Earnings Growth (%)
14.8
Long-term Sales Growth (%)
14.0
Standard Deviation % (260d)
22.8

Investment Process

Quantitive Analysis
Qualitative Analysis
Portfolio Construction
Risk Management
UNIVERSE
BIG KNOWABLE THEMES
GROWTH
ACTIVE MANAGMENT
NYSE, Nasdaq, ADRs (min 80% US-based)
Current consumer trends (digital, transformation, e-commerce)
Min 66%>100B Cap
Periodic Rebalance
Min. Market Cap > $10B
Technological Innovations (AI, Sustainable Energy)
Max 33% < $100B Cap
Trimming or dollar-cost averaging during volatile times
Min. projected sales > $1B
Geopolitical Events (affecting commodities, defense spending)
Double Digit sales growth
Exiting a position during significant change or fundamental factors
Positive projected sales or earnings growth, determined based on each industry
Current Monetary Policy (restrictive or accommodative)
VALUE
Monitoring Market Cycles
Analyst ratings >3.0
Political and Fiscal Policies (taxes and expendature)
Min 90% > $100B cap
International Trades and Barriers to Entry (globalization, tariffs)
Min High single-digit to low double-digit earnings growth
Total Portfolio
40-60 Stocks
Positions < 8% and > 1%

Disclosure

The following composite benchmark is used:

S&P 500 INDEX

Risks and Considerations: Investing involves risk, including possible loss of principal. Asset allocation and diversification may not protect against market risk, loss of principal or volatility of returns. Actual investment outcomes may vary. There is no guarantee that these investment strategies will work under all market conditions or are suitable for all investors and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market. No representation is being made that any account, product or strategy will or is likely to achieve profits. Consult your tax advisor for possible tax consequences associated with this investment. An investment in this separately managed account should be made with an understanding of the risks associated therewith that includes, but is not limited to:

Dividend Payment Risk: An issuer of a security may be unwilling or unable to pay income on a security. Common stocks do not assure dividend payments and are paid only when declared by an issuer’s board of directors. The amount of any dividend may vary over time.

SMA accounts typically require a minimum investment of $100,000, although the specific minimum account size varies by program and may be subject to change. The manager may waive these minimums based on client type, asset class, pre-existing relationship with client and other factors. For certain accounts, a negotiated minimum annual fee applies. Please consult with your financial professional for applicable minimums.

Check with your financial professional for specific product availability and performance information. This information may change without notice. From time to time, we may close or reopen strategies.
Securities are available through your financial professional. Not FDIC Insured. Not Bank Guaranteed. May Lose Value. For informational purposes only and not a recommendation to purchase or sell any security.

©2025 Pence Capital Management
5000 Birch Street, Suite 8000 Newport Beach, CA 92660 ■ 855.939.5200 ■ pencecapital.com

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Strategies

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Ubiquitous Strategy
Ubiquitous Strategy Finds investment opportunity in stocks of “ubiquitous” companies—those whose services have become part of our daily lives and whose position at the choke point in the supply chain gives them pricing power.
Content Leaders Strategy
Content Leaders Strategy Seeks above-average capital appreciation by investing in stocks of U.S. companies that are dominant in the media content arena, including television producers, filmmakers, content libraries, broadcast channels and delivery platforms.
Digital World Leaders Strategy
Digital World Leaders Strategy Finds mega-platform providers that have the resources to evolve, transform, and acquire as technology advances and consumer demand shifts.
Building America Strategy
Building America Strategy Invests in stocks of companies that can benefit from “Building America” through infrastructure projects including civil construction and engineering, and the sale of construction materials.
Human Behavior Strategy
Human Behavior Strategy Focuses on companies that derive the majority of their revenue through sales to U.S. consumers, fulfilling the different levels of human need in a variety of income categories.
PENCE Transformers Index (Ticker: TRFM)
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How to invest

Pence Capital Management develops investment strategies for distributors and model portfolios for advisors. To invest in Pence Capital Management Strategies, please contact your broker or advisor.

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