Introduction to Polen Focus Growth Strategy

Polen Capital's Focus Growth strategy is renowned for its disciplined approach to investing in high-quality growth companies. In the fourth quarter of 2024, the strategy made significant adjustments to its portfolio, including a trim of its position in UnitedHealth Group Incorporated (UNH). This move reflects Polen's ongoing commitment to optimizing its holdings for long-term growth and durability.

Portfolio Performance in Q4 2024

The Polen Focus Growth Portfolio delivered a return of 4.88% gross of fees and 4.65% net of fees in the fourth quarter of 2024. This performance outpaced the S&P 500's return of 2.4% but fell short of the Russell 1000 Growth Index's impressive 7.1% return[1][2]. Key contributors to the portfolio's success included Shopify, Amazon, and ServiceNow, with Shopify being a new addition in the second quarter and showing remarkable growth.

Key Contributors:

• Shopify: Up 21% in Q4, driven by strong GMV growth and expansion across its enterprise and international segments.
• Amazon: Continued robust growth across all businesses, with operating margins expanding significantly.
• ServiceNow: Maintained strong growth momentum despite valuation-related trims.

UnitedHealth Group Trimmed

Polen trimmed its position in UnitedHealth Group to fund the purchase of CoStar Group. Despite this adjustment, Polen remains optimistic about UnitedHealth's long-term prospects. The decision was strategic, reflecting a preference for what was seen as a superior investment opportunity at the time[2].

UnitedHealth Group's Performance:

• Revenue Growth: UnitedHealth reported an 8% year-over-year revenue increase to $400.3 billion in 2024[3].
• Operational Efficiency: The company enhanced its operating cost ratio through business portfolio refinement and improved efficiencies[3].

Strategic Portfolio Adjustments

In addition to trimming UnitedHealth Group, Polen made several other strategic moves:

• Added to Existing Positions: Oracle, Zoetis, and Eli Lilly were bolstered due to their strong growth potential and favorable market conditions[2].
• New Position in CoStar Group: Initiated to capitalize on emerging opportunities in the real estate technology sector[2].

Key Additions:

• Oracle: Benefiting from its cloud infrastructure business and potential AI-related demand.
• Zoetis: Despite short-term challenges, its biologic drug pipeline remains promising.
• Eli Lilly: Strong GLP-1 revenue growth despite recent market pressures.

Outlook and Strategy

Polen's strategy emphasizes durable growth and resilience, focusing on companies with strong fundamentals and competitive advantages. The team remains cautious about market valuations and potential inflationary pressures but is optimistic about the long-term growth potential of its holdings[1].

Future Focus:

• Growth Sustainability: Polen seeks companies with sustainable earnings growth, even in challenging economic environments.
• Innovation and Technology: Emphasis on sectors like cloud computing and AI, which offer significant growth opportunities.

Conclusion

Polen's adjustments to its Focus Growth strategy reflect a commitment to maximizing long-term returns through careful portfolio management. By focusing on high-quality growth companies and making strategic adjustments, Polen aims to navigate both favorable and challenging market conditions effectively.