The closed-end structure of a listed investment company is ideally suited to building a long-term portfolio, as Argo does not experience investor redemptions which might otherwise force desirable long-term holdings to be sold. Instead, shareholders wishing to liquidate their holding in Argo simply sell their shares on the share market. This stability allows Argo to take advantage of short-term market fluctuations in order to buy or add to long-term holdings when prices trade below the long-term valuations calculated by the investment team. The selling of investments is relatively rare and generally only occurs due to takeovers or when it is perceived that the long-term value of an investment is compromised by deteriorating industry conditions or other concerns.
Argo is a long-term investor in Australian equities and has been steadily building a large, diversified portfolio since 1946. We are strong believers in the cumulative effect of investing in quality companies for the long-term and we avoid the temptation to seek short-term gains in high-risk situations.
Our investment objective is to maximise long-term returns to shareholders through a balance of capital and dividend growth. In order to achieve this, a diversified portfolio of around 100 holdings has been constructed. The portfolio is deliberately conservative, with the 20 largest 'blue chip' holdings making up more than 60% of the value of the portfolio and providing over 60% of the dividend income. Smaller companies are also held, where we see potential for long-term growth and increasing dividends.
In technical terms, Argo is a value investor with a bottom-up approach to investment analysis. However, put simply, we seek to identify the highest quality Australian companies and trusts through detailed analysis of each entity, and then over time, buy or add to those stocks when they are trading at prices which represent good long-term value. This patient and conservative approach has stood the test of time and provided our loyal shareholders with both long-term capital growth and dividend income.