When investors pay an active fund manager to hold a “high-conviction” set of stocks, the concentration of equity choices cannot come much more pronounced than at the fund management firm of Polen Capital Management, a Florida-based business.

This is very much a "bottom-up” stock-picking house that adopts the “value” model of investing. And to signify the level of conviction at play, the firm has only owned about 100 issuers’ equities in the past 25 years of Polen Capital’s life - a turnover of about four names a year. (It holds about 20 stocks at present.) But such a low turnover does not mean managers are idle, as this publication learned recently.

"We come out of the value school and apply this thinking to growth stocks. The companies we are looking at are a bit faster growing in the early part of the growth cycle and not paying out a lot of cash. They are not, for the most part, big, slow growth stocks. Our companies continue to post strong earnings growth," Daniel Davidowitz, chief investment officer and portfolio manager, said during a visit to London. His firm is based in Boca Raton. Davidowitz spoke alongside Stan Moss, chief executive.

The managers spend considerable time examining businesses with persistent, high-quality features at relatively early stages in their lives. "You cannot just sit and wait until the [persistent features] are out there and proven," Davidowitz said.

One way to find these unacknowledged business "stars," he said, is to note that market prices consistently undervalue growth companies due to the impatience of investors looking for quick results. "If you are smart in studying businesses you can find those firms that are good growth prospects,” he said.

The approach has paid off, the firm, which held $5.1 billion of client money as of March 31, says. With a track record going back to January 1989, Polen’s strategy - on which its funds are based - has returned 14.2 per cent annualized compared with 9.8 per cent for the S&P 500 and 9.3 per cent for the Russell 100 Growth Index. (Source: Polen Capital Management).

Earlier this year, Polen brought its strategy to the European market, launching a Dublin-registered UCITS vehicle, called the Polen Focus US Growth Fund, managed by Davidowitz and Damon Ficklin. The Polen Focus US Growth Fund is a sub-fund of Polen Capital Investment Funds. Share classes are available in dollars, sterling, and Swiss francs. The fund will initially be marketed to UK, Swiss and Scandinavian based professional investors, primarily wealth and discretionary managers, funds of funds and institutional investors.

Polen was originally founded in 1979 by the late David Polen (who passed away last year) and was an asset management firm providing advisory and brokerage services to clients. In the late 1980s, Mr Polen developed an investment process and a distinctive growth-based investment philosophy in the traditions of legendary figures such as Ben Graham and Warren Buffett, among others.

That old active vs passive debate

Moss argued that Polen’s persistent high-focus model has paid off, even while other investment fashions have waxed and waned. And the firm has seen its fortunes continue to thrive, he said, against a time of many headwinds. According to some measures, more than $1 trillion of money came out of the active equities sector and into other, supposedly less risky assets between 2008 and 2012. While at the same time Polen grew by 500 per cent, Moss said.

There are not many funds around like these, Moss said. The number of specialist US-focused fund managers offering exposure to such a concentrated, high-conviction portfolio for international clients in a UCITS structure is relatively rare.

An extremely low portfolio turnover might suggest that Polen’s managers have a quiet life, but reaching that narrow number of stocks from a big universe requires constant research and conversations with companies across the US. Polen Capital Management reckons these efforts are worth it.