If you’ve been investing for any length of time, chances are good that you have heard about GARP investing—Growth at A Reasonable Price. GARP investors look for those companies that consistently earn and grow and that exceed broad market levels and exclude companies that are valued too high or low. YH&C Investment’s GARP portfolio is—as its title implies—a GARP portfolio which also invests in companies with an upcoming merger, spinoff or arbitrage opportunity. Let’s take a look at a couple of the positions this portfolio holds.
Pictures of the Earth are not easy to get, and DigitalGlobe Inc (NYSE:DGI) is one of the companies that provides them. They use high-resolution imagery satellites to take pictures of the planet and work with the U.S. government to support defense programs as well as mapping, gas exploration and environmental review services. For the past three years the company has shown consistent growth of stockholder equity as well as net revenues. They have a competitive price to earnings ratio for their industry which shows that the company might be slightly undervalued—but not excessively so.
GigaMedia Ltd (NASDAQ:GIGM) is a video game software company. They offer online gaming services to people of China, Hong Kong, Taiwan, Macau and parts of Europe. They focus on multiple player role playing games and online casino and poker games. Their price to earnings ratio is very low compared to competitors. Their stockholder equity shows consistent increases over the past three years—and in 2009 it more than doubled the previous years’. The company’s net income has also shown consistent signs of growth. When considering the future of the company, it’s easy to imagine it riding out any European and Asian economic crisis since video gaming is so consistently popular and affordable.