A connected portfolio, for friends.
Noble Investors is undergirded by a lifetime of big-city expertise and relationships. We may be local but this is not a small-town attempt at wealth building. This core portfolio is steeped in experience, and it’s fully connected to the best resources.
Sharing the experience of wealth
Noble Investors exists to give friends a trustworthy venue into public securities by investing along with us.
Assets are managed as if pooled in a single core portfolio of stocks along with the occasional ETF and mutual fund. However, each investor’s assets are actually held in a separate account by Interactive Brokers LLC, a well-known and conservatively managed custodian with a strong balance sheet. Each investor with internet access has full transparency into their account.
We eat our own cooking! That means our personal accounts are managed the same as the rest. However, separate accounts allow each investor to exclude a certain stock or industry if so desired.
Philosophy, Strategy & Process
We believe in investing in outstanding businesses at attractive valuations.
The strategy is called “Qual-Val” which is short for Quality and Value. We screen for quality and value which significantly narrows the universe of stocks to a much smaller sample.
Quality metrics include:
- Cash flow return on invested capital relative to peers
- Conservative balance sheets
- Low capital intensity
- Recurring revenues
- Consistency of results
- Dividend yield and history.
Value metrics Include:
- Enterprise value to EBITDA relative to peers
- Free cash flow to enterprise value
- Free cash flow yield relative to bond yields
- Price/earnings/growth.
Using this small sample, we look for qualitative factors like:
- Competent leadership
- Customer centricity
- Sustainability of competitive advantage
- Distinctive intangible and/or tangible assets
- Superior revenue growth opportunities.
This last process narrows the sample down to a manageable yet diversified portfolio of 20-30 stocks.
Cash Management
Regarding cash, we expect to typically maintain no more than about 5% of account values in cash or cash substitutes, but reserve the flexibility to temporarily increase cash to as much as 50% in an interest earning account during times of market extremes. Cash balances over $10,000 in accounts with net asset value (NAV) of $100,000 or more automatically earn an interest rate that approaches that of the 10-year Treasuries.
Measuring Performance
As in all investing, there can be no guarantee of performance, and downturns are a part of the business. The stock market is a volatile arena, so we have to consider performance on a longer timeline. One aim of Noble Investors' strategy is to smooth out those big swings. This means we are intentionally positioning the core portfolio with the aim that when the more speculative growth stocks swing high, we'll not soar as high, but conversely, when the market dips low, we'll be positioned to outperform.
We are not closet indexers and do not expect to perform like any index. Long-term, though, our aim is to outperform the broad U.S. market index.
Overall, the goal is to give a return with a lower risk level, and a better risk adjusted return to use investor-speak This is not the place for speculating and looking for home runs every inning. We aim to sleep well at night, so you will be able to also.
