Market return · 15%/yr
$1.60MS&P 500 average annual return over the last decade
The Pragmatic Portfolio
Put long-term capital behind the world's value creators.
Pragmatic Capital is a San Francisco Bay Area investment partnership founded to help institutions use the compounded returns of value creators in the economy to fund value creation in society. Through deep research, we construct a lean portfolio of powerful businesses creating value in the real world.
Explore the Pragmatic PortfolioThe gap · The compounding chasm
The market creates value.
The average institutional investor captures half of the market's return.
The return gap is the distance between the market's return and what a portfolio actually captures. Left open, it compounds every year.
Average institutional investor · 7.5%/yr
$0.42MThe average institutional investor captures half of the market's return
The gap widens exponentially over time.
The endpoint is dramatic. The path reveals why: every year of missed growth leaves less capital available to compound in the next.
Starting capital
$100,000
Market
$1.60M
Average institutional investor
$0.42M
Market return · 15%/yr
S&P 500 average annual return over the last decade
Average institutional investor · 7.5%/yr
The average institutional investor captures half of the market's return
The stakes · Why the gap matters
The need only grows. The assets behind it have to keep pace.
The societal needs institutions serve are growing, and the cost of delivering on them rises every year. Invested assets have to maximize growth to continue the work, and every additional point of return compounds into unrestricted assets: the capital that funds it.
The work is growing.
The societal needs institutions serve only expand as time goes on.
Delivering it costs more each year.
Everything is getting more expensive, so the cost to deliver service keeps increasing.
Invested assets must maximize growth.
Higher returns grow unrestricted assets, the capital that lets the mission continue and expand.
The opportunity · Wall Street creates the opening
The gap can be closed. Wall Street's own approach creates the opening.
The approach that dominates Wall Street pushes powerful businesses in and out of favor on stories rather than facts. When the crowd sells a great business for the wrong reasons, it is mispriced. That is not a problem to fix. It is an opportunity to seize.
They trade stocks. They don't own businesses.
Most new investments are gone within a few years. Ownership is the claim; turnover is the tell.
Big names, small bets.
The dollars hide in a handful of blue chips. The rest is scattered a fraction at a time.
The decisions do not persist.
Exits are repurchased. Sell-downs are rebuilt. The portfolio is continuously repositioned, not patiently owned.
The Pragmatic Portfolio
Purpose-built to
Close the Gap.
The opportunity is real. Seizing it takes a portfolio built differently: selective enough to own only the businesses that matter, and independent enough to buy them when the crowd has them wrong.
The Pragmatic Portfolio is built for exactly that. Deep research identifies a lean set of exceptional businesses with the power to shape their markets, bought when Wall Street's churn has mispriced them. These four asymmetries are designed into The Pragmatic Portfolio to place long-term capital behind that power and help it compound in service of an enduring mission.
01 · Opportunity
Asymmetric Payoffs
Capture outsized returns by investing against consensus.
Non-consensus opportunity
02 · Insight
Asymmetric Knowledge
Take advantage of blind spots created by consensus' shallow research.
Depth where the market is shallow
03 · Selection
Asymmetric Exposure
Avoid the laggards by focusing on proven value creators.
Exposure to value creation
04 · Structure
Asymmetric Risk/Reward
Hedge the downside without limiting the upside using options.
Downside discipline · Upside retained
Continue into the investment discipline
Explore the Pragmatic Framework
↗