- Gerry Frigon is a mutual fund manager and investment chief for $220 million AUM Taylor Frigon Capital.
- Frigon’s growth-focused Core Fund has returned nearly 700% since its inception in 2007.
- He told Insider about the approach that has helped his core and small-cap strategies thrive.
- See more stories on Insider’s business page.
Nothing scares investors more than inflation, especially if they’re plowing money into high-growth stocks. But if they want to succeed, then they should tune out those worries entirely.
Fund manager and Taylor Frigon Capital Management investment chief Gerry Frigon says that focusing on the long term and not the rise and fall of the business cycle has helped him generate outsized returns for years.
“We can be affected by whatever the story of the day is just like anybody else can, but we’re not going to react to it,” he told Insider in an exclusive interview. “We feel like if we can predict the business right, the rest will take care of itself.”
As it turns out, Frigon has been making some very smart predictions lately. Taylor Frigon’s Core Growth Fund boasts a return of 699.5% from its inception in January 2007 to April 30, 2021, according to data supplied by the firm. That translates to 572.3% after expenses. Even that lower figure is roughly double the 293.5% returned by an investment in the S&P 500 over the same span.
Over the last 12 months of that stretch, Taylor Frigon’s Core Growth Fund was the second-highest returning large cap mutual fund on the market, according to Kiplinger, and over the previous three years it ranked fifth.
Meanwhile, Frigon’s small-cap Aspire Strategy, a more concentrated approach, has more than tripled the returns of small-cap indexes over the same 13-year span with a return of 339.2%, or 311.5% after fees.
In order to achieve these impressive returns, Frigon looks for investments that bridge the themes of technology, demographic change, and business process, and if he finds something that works, he’s happy to hold it for the very long term. In that way, his approach in mutual funds and in his firm’s venture capital funds are much the same.
“10 and 15-year holding periods for us, even in the public sector, are not unusual,” he said.
Frigon describes his ideal holdings as “companies that are building technologies that is particularly innovative, or companies that are using technologies in a way that is particularly innovative. Better yet is when you can find companies that are actually forging new markets, but that’s obviously much harder to do. You don’t come across those kinds of transformational things every day.”
Business software has been key to the fund’s recent success, since there was so much demand for new forms of intelligence and data during the pandemic. Those themes tie into his investment in Coupa Software.
“Coupa … allows companies to better know what’s happening inside of their business, and everything related to payments, accounts, receivable, accounts payable,” he said.
Innovation and opening up new markets is vital in the healthcare space, and that feeds into several of his largest positions there. Frigon provides NovoCure and Edwards Lifesciences as examples of companies he likes in the .
“It used to be much quicker to use open heart surgery and literally open up somebody’s chest in order to operate on them for whatever heart problems they have,” he says of Edwards. “Their Sapien device is a much safer and more effective way to deal with these heart problems.”
Novocure, one of his larger Core Fund investments, markets a device that uses electrical fields to stop the growth of cancerous tumors, and it’s pursuing a large number of marketing clearances in addition to its previous approvals in glioblastoma and mesothelioma.
In addition, Frigon cites two creative 3-D printing companies, Nano Dimension and Kornit Digital, as top picks. Frigon says he’s also pursuing opportunities in “digital power” and distributed computing because he believes blockchain technology will challenge and then replace data centers.
“It becomes an entirely new computing paradigm that takes the power away from those that have created, in the last 10 to 15 years, the big hyperscale data centers that are run by the big cloud companies. Those are all centralized depositories, very at risk of security breaches,” he said.
While he’s owned Bitcoin as a personal investment for five years, and says he wishes he’d bought even more, Frigon says he doesn’t think he’ll find the right publicly-traded way to invest in that trend for a few years yet.
“We are believers in the concept. We’re not sure that we’ve found the exactly right mechanism for it yet,” he said, adding that blockchain technology “can be used and applied in so many different areas beyond just digital currencies.”