Hard Carrying

“Hard carry” is a terminology used by gamers that refers to a player or game character dominating an entire game or a game mission, resulting in the player’s/character’s team victory, even though the rest of the teammates are either performing poorly and/or did not do anything much. Putting it in a general context, a person is seen hard carrying a group when he/she was the one pulling everyone through with his/her skills and/or knowledge.

Picture generated by Meta AI.

On the investment front, there could be a few securities or counters doing the hard carrying of gains, such as those that provided the most capital gains, or those that gave the most dividends, or a fair mix of both.

It would be an interesting exercise to see what counters are the “hard carries” in one’s own portfolio, and although it may be comforting to see which were the resulting counters, an analytical and objective view must also be adopted on what to do with them.

Sustainability

Sustainability is often one of the key considerations of investors when conducting a portfolio review. Questions such as whether a counter would continue to give the same growth rate and/or provide the same yield throughout. Even if it cannot sustain the required increment, does it able to maintain within the desired threshold, or perhaps it could still provide some alpha over market returns or inflation rate? These two questions could only be guesstimated by fundamental analysis, i.e., reading up on the company’s forward trajectories and plans, and foreseeing how things unfold in the markets or anything that has a direct or strong indirect effect on the company/sector/industry concerned. 

Sizing

Hard carries in the growth category may run into the risk of being too dominating in terms of sizing in the portfolio. Unless one’s conviction and confidence on a company is strong, it pays to be diversified to avoid a wipeout should anything happen. Different people have different sizing guidelines, which for our Bedokian Portfolio the limit is 12% (for individual company counters).

Selling

On a related note to manage sizing, selling part of the hard carrying holdings is one way, which on a wider scale it is called rebalancing. As part of diversification, rebalancing allows the investor to move the capital from one oversized asset class or counter to an undersized asset class or counter, thus avoiding the potential larger loss should the abovementioned wipeout occurs. A big challenge in carrying out rebalancing is the mental hurdle of not letting a winning position go, thinking that it still has the potential to go higher (and earning more). For this it may be necessary to sacrifice a little bit of the hard carriers for the sake of the portfolio, for I had mentioned before, no security/counter is bigger than the portfolio itself.