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A $17 billion investor explains her uncommon tactics for finding the market’s biggest cash cows — a strategy that historically guarded against crashes

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Kera Van Valen's approach for finding companies with the most cash helped her fund outperform its benchmark during the financial crisis.

Fund and its global counterpart — both of which she manages — have the very specific goal of generating 9% cash return per annum over a full market cycle.

Van Valen's focus on quality dates back much further, to 2005. When the sell-off ensued during the fourth quarter, her US portfolio illustrated how a focus on strong free-cash flow is a viable defense against market drawdowns. It had fully recovered from its losses by March 1 whereas its benchmark, the Russell 1000 Value index, regained its footing more than a month later. Over the past year, her US portfolio has earned an 8.5% total return versus 4.2% for the Russell index.

This differentiated approach means she de-emphasizes many of the commonplace yardsticks that make for attractive investments.

 

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Lol her fund has a mandate to deliver 9% returns per year? What a joke, she will never be heard from again.

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