George Tharakan, Chief Investment Officer, Alamar Capital Management
George Tharakan is the co-founder and chief investment officer of Alamar Capital Management LLC, a private wealth management firm in Santa Barbara, California.
Previously he was the Director of Research and Portfolio Manager at Santa Barbara Asset Management.
Prior to becoming an investor, Mr. Tharakan was an engineer at Intel Corporation where he designed microprocessors.
He is currently the Co-Chair of the CFA Institute – Santa Barbara Chapter and a member of the Santa Barbara Angel Alliance, a group that assists and invests in entrepreneurs in Santa Barbara.
He is also a member of the University of California Santa Barbara (UCSB) Dean’s Investment Group Advisory Board.
Mr. Tharakan graduated from the Indian Institute of Technology (IIT) as the top student in his department, obtained an M.S. in computer engineering from the University of Illinois, and received an MBA in finance, with honors, from the Anderson School of Business (UCLA).
In this 2,313 word interview, exclusively in the Wall Street Transcript, George Tharakan details his investing philosophy and gives examples from his current portfolio.
“I’m the Co-Founder of Alamar Capital, located in Santa Barbara, California.
I started the firm in 2010, with my partner, John Murphy. We manage investments for a diverse group of individuals and institutions in a separate account format. I’m also the Chief Investment Officer, and I manage the Alamar Equity portfolios of the firm.
We are very tax efficient; our average holding period is five years. We invest in long-term compounding machines.
I was the initial client of the firm managing my personal savings, and I remain the largest client in our equity strategy to this day. Both John and I are fully aligned with our clients’ investments.
I started my professional career as a microprocessor designer at Intel and left to become an investor. I have been investing professionally since 1997…
We typically purchase anywhere from 35 to 50 stocks, and use a very long-term approach for investing. Our average holding period is about five years.
We invest across all capitalizations, from about $1 billion all the way up to $200-plus billion in value.
A client who joined us in the beginning, when we started in 2010, would now have made over five times their initial investment.
We typically purchase profitable, growing companies, reasonably priced, with great prospects and strong secular growth, across all sectors. We have investments in consumer, financials, technology, and healthcare, all with varying capitalizations.
We avoid what I call cocktail names. That means, for example, during our entire 11-year history we have never purchased Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Facebook (NASDAQ:FB), Google (NASDAQ:GOOG), Microsoft (NASDAQ:MSFT), Netflix (NASDAQ:NFLX) or Tesla (NASDAQ:TSLA).
I call these the cocktail names because everybody knows and brags about them at cocktail parties.
These are great companies and have been fantastic investments, but we are not sure what value we bring to the table if every mutual fund, hedge fund and index fund owns these stocks in large amounts.
Moreover, they are widely followed on Wall Street with over 30 analysts covering each of these stocks, analyzing and critiquing every single action of company management.”
Currently, the Santa Barbara money manager is focusing his attention on financial and insurance companies:
“For insurance, one of our long-term holdings is Centene (NYSE:CNC), a healthcare insurance company.
We have owned that stock now for 11 years — since we started the firm. And it’s now up roughly 12 times our initial purchase price. The company has a very good management team, and we continue to like it even today.
…There are just a few companies that do what they do.
They started off as a very small regional company based in St. Louis, Missouri, and they have now become a nationwide health insurance provider.
There are very few companies that offer health insurance nationwide. There’s Cigna (NYSE:CI), Aetna (NYSE: CVS), Anthem (NYSE:ANTM), United Healthcare (NYSE:UNH) and Centene.
Healthcare costs are one of the biggest problems state governments are facing.
And although states have tried very hard to reduce their expenses in that area, it’s very difficult for a state to tackle. So they need to outsource it to professional companies like Centene, who find places to cut back on healthcare costs, and be more efficient.
Healthcare is a very inefficient sector in terms of cost, waste and misallocation of resources.
We feel the primary avenue to reduce costs is information; you need access to large datasets across the health spectrum.
For example, which are the best hospitals that provide the best results for a particular surgical procedure, risk-adjusted; who are the best doctors who can provide similar or better results for a lower price; can an expensive drug be replaced with a cheaper therapy; and so on.
So it’s a tremendous information game.
And it’s very difficult for a state or a company to figure all this out. It’s best left to insurance providers because they alone have all the relevant information.
And there are just a few of them with access to this whole spectrum of data to help states and employers drive costs down.
This will become an increasingly bigger problem going forward, as healthcare costs eat up a larger share of the wallet.”
The Santa Barbara money manager George Tharakan sees new opportunities for these companies:
“Well, we have a huge budget deficit and we have a huge amount of debt, which eventually has to be paid off.
So in my view, the only way to solve this is through taxes. Inevitably, taxes are going to go up for both corporations and individuals.
There’s just no way around it.
We cannot continue to have these fiscal deficits year in, year out.
And especially what this pandemic has shown us is that there’s been a severe underinvestment in healthcare facilities across the country, in preparedness for pandemics, and how vaccines are rolled out.
From the beginning, whether it’s the CDC or the FDA, they just all fell behind as soon as this pandemic hit. In the future, I would expect a big investment in these areas.”
Get the complete picture from the Santa Barbara money manager George Tharakan by reading the entire 2,313 word interview, exclusively in the Wall Street Transcript.
George Tharakan, Co-Founder & CIO
Alamar Capital Management LLC
email: george@alamarcapital.com
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