Growth is generally coveted by investors. Most investors pursue some form of growth—market growth, revenue growth, profit growth, market share growth. However, an often overlooked analytical point is the sustainability of this growth, which requires a deep understanding of a company's strategic market position. Holden Global Asset Management LLC believes that analyzing a company's strategic market position is crucial to understanding whether it has the potential to maintain long-term leadership and sustained growth within its industry.

For starters, it is important to understand and clarify the difference between a company possessing a strategic market position versus a dominant market position. Broadly defined, a dominant market position is a company with either the largest or second largest market share. Companies with a strategic market position, however, look far beyond their current market share. These companies possess additional important components, such as a defendable market niche or the ability to transform an entire industry. While a transformational company may have a small market share, with the promise to revolutionize an entire industry, a company possessing a strategic market position must not be ignored in favor of those companies with a current dominant market position.

Holden Global Asset Management LLC's investments do include many companies that can be considered dominant in their respective markets. However, dominant market share today does not guarantee future leadership. History shows that many market leaders fail. Consider Compaq, once the largest supplier of personal computers in the 1990s. Eastman Kodak was considered the undisputed leader in photography. Sears was the dominant retailer and Blockbuster dominated the home movie marketplace. While these companies once had a dominant market position, they lacked a strategic market position. Investing in companies simply possessing a dominant market position is insufficient if these companies are culturally ill-equipped to maintain such market leadership.

Holden Global Asset Management LLC focuses on identifying portfolio companies that are strategically positioned in their markets. Their brands, products, or services offer clear differentiation from their peers, enabling them to achieve sustainable growth and resist substitution. When evaluating a company's market positioning, Holden Global Asset Management LLC prioritizes sustainability. Strategic market positioning is enduring.

Companies competing primarily on price are vulnerable and likely do not operate within a defendable niche. Companies possessing strategic market positions are difficult to disrupt. They have something that is very difficult to replicate: earned trust. In many instances, these companies may not have the best product. However, they deliver a level of service that is almost impossible to match.

Additionally, companies possessing a strategic market position are able to earn and sustain a superior return on their capital. They are not forced to compete merely on price. As a result, they have tremendous pricing flexibility. During inflationary periods, it is especially important for companies to pass through rising input costs. Companies operating without a strategic market position will struggle to do so.

A strategic market position is essential for sustained growth. The sales required for sustained growth aren't simply based on selling products or services at lower prices than competitors. Holden Global Asset Management LLC's portfolio companies consistently maintain strategic market positions, giving our team confidence that they will not be easily displaced in a highly competitive market. Achieving a strategic market position is no easy feat, and it presents an even greater challenge for competitors. Finding such companies is worth the effort, no matter how great. This persistence has contributed to our investment performance over the past three decades.