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Important Disclosures

  • The use of the terms “HS Management Partners,”  “HSMP,”  “Firm,”  “we,”  “our,”  “its,”  and  “us” on this website refer to HS Management Partners, LLC.   The use of the term “Composite” on this website refers to our HS Management Partners Concentrated Quality Growth Composite.  The use of the term “net-of-fees” on this website means net of our investment advisory fees and net of trading costs only.
  • HSMP offers one sole investment strategy:   HSMP Concentrated Quality Growth Equity strategy.   See Item 8 of our Firm Brochure (ADV Part 2A) for a description of our investment process.    We seek to apply our investment strategy to all client accounts with the goal of minimizing dispersion and providing similar investment results across accounts over time.    However, the implementation of our investment strategy depends on several factors, including client restrictions, type and size of the account, timing and market conditions at the account’s inception and further contributions or withdrawals, timing and terms of trade execution orders, and client directed brokerage and commission recapture instructions.    Therefore, an account’s holdings and investment performance could deviate from other client accounts managed in accordance with our sole strategy.    Clients’ experience may vary for several reasons, and clients and prospective clients should not assume or infer that their experience will be similar to that of other past or existing clients.    Given our investment strategy as stated above, we tailor our investment advice to clients in limited circumstances.
  • The decision to open an account with HSMP is that of the client, and therefore it is up to each client to determine whether HSMP’s management strategy is appropriate for his/her specific situation.    We solely advise clients as to the portion of their assets for which we have been given discretionary management in accordance with our investment strategy.    We do not advise clients on their overall financial plan.    Further, we do not take into consideration clients’ assets or investments outside of our management when implementing our strategy in their accounts at HSMP.
  • In implementing our investment strategy, we typically build a concentrated portfolio with a hard cap on company names and with an aim to keeping our client’s capital nearly fully invested.    Client accounts generally hold 20 to 25 companies, although in certain circumstances they may hold more or less names (for example, during certain transitional periods of selling or buying a security or due to some corporate actions such as spinoffs, or due to some other factors).  Cash is not a major component of our investment strategy and we tend to keep very low cash balances in client accounts.  Although we primarily invest in domestic securities in the form of common stock, client portfolios can include foreign issuer equity securities in the form of American Depository Receipts (both sponsored and non-sponsored) or Ordinary shares.  As bottom-up, fundamentals-first investors, we do not maintain limits on industry or sector weightings, and while we do limit portfolio positions by company, clients’ portfolios are likely to be significantly concentrated by sector, industry and/or geography, among other factors (client accounts can typically have over 50% exposure to the consumer discretionary, consumer staples and/or technology sectors).    We take an incremental approach to actively managing client portfolios.  Our annual portfolio turnover rate (comprised of new names and incremental changes to existing positions) has generally ranged between 65% to 95% (measured in dollars) but has been higher than 110% in certain market conditions.
  • HSMP claims compliance with the Global Investment Performance Standards (GIPS®).    For the purpose of complying with GIPS®, HS Management Partners defines itself as HS Management Partners, LLC, an independent SEC registered investment adviser.    (Please note that although HSMP is registered with the SEC as an investment adviser, SEC registration does not imply any certain level of skill or training.)    The HS Management Partners Concentrated Quality Growth Composite includes all fully discretionary, actively managed, fee paying accounts which employ our style of investing in 20-25 quality growth businesses. These accounts must have a market value exceeding $500,000 at the time of initial inclusion in the Composite and have a market value exceeding $300,000 to maintain inclusion.    The U.S. Dollar is the currency used to express performance.    For more information or for a copy of our GIPS® Report and/or list of composite descriptions, please contact us at 212.888.0060.
  • For benchmark purposes, the Composite is compared to the S&P 500® Index as a benchmark for market context only.  The S&P 500® Index is an unmanaged market capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.  There are meaningful differences between the Composite and the S&P 500® Index that should be considered when comparing performance, such as terms of composition, concentration and volatility (e.g., the Composite contains securities not represented in the S&P 500 Index and is much more concentrated than the S&P 500 Index in terms of companies and sectors; the average market capitalization of companies in the Composite will likely differ from the S&P 500 Index and market or economic conditions can affect positively/negatively the Composite’s performance but not the S&P 500 Index to the same extent).  In addition, the S&P 500 Index does not bear fees and expenses and investors cannot invest directly in the S&P 500 Index.  Furthermore, we do not seek to mimic any market index in our investment approach and do not maintain limits on industry or sector weightings.  For these and other reasons the Composite does not directly relate to an index.
  • Client account performance may vary from that of the Composite or from that of other client accounts for reasons such as client restrictions, type and size of the account, timing and market conditions at the account’s inception and further contributions or withdrawals, timing and terms of trade execution orders, and client directed brokerage and commission recapture instructions.
  • Performance (returns) presented on this website reflect the reinvestment of dividends and other earnings.   Composite returns are presented net of advisory fees and trading costs but do not reflect the effect of U.S. or foreign taxes.
  • Upside [downside] ratios shown on our Risk page were computed by dividing the cumulative annualized return of the HSMP Composite (net-of-fee) in months of positive [negative] index returns by the cumulative annualized return of said index for those same months. In other words, the upside ratio represents the percentage share of participation the HSMP Concentrated Quality Growth Portfolio captured as a percentage of the index gain in the months when the respective index was positive, while the downside capture ratio represents the percentage share of participation the HSMP Portfolio captured as a percentage of the index decline in months when the respective index was negative. There is no guarantee that investing with HSMP will be profitable or that we will be able to effectively manage risk or maintain these or similar upside [downside] ratios going forward.  Past performance is not indicative of and does not guarantee future results.  Please refer to our Firm Brochure (ADV Part 2A) for more information about risks applicable to our investment strategy.
  • Investing in securities involves significant risks, including the risk of loss of the original amount invested. Refer to our Firm Brochure (at www.hsmanage.com/documents/ or upon request at 212-888-0060) for material risks applicable to our strategy and information regarding our Firm.  There can be no guarantee that investing with us will be profitable.    Past performance is not indicative of and does not guarantee future results.  The following is a summary of some material risks, not all risks, applicable to our investment strategy and advisory business, listed alphabetically.
  1. Active Management Risk. Active management is key to our investment strategy, and we take an incremental trading approach.  This increases trading, which in turn increases trading commissions and/or other transaction costs, fees and expenses that will reduce client returns/performance.  Portfolio turnover can also result in short-term capital gains, which can reduce the after-tax return for taxable clients.
  2. Catastrophic Events, Civil Disturbances, Health Crises, Wars, Natural Disasters, Terrorist Attacks, Environmental Calamities, and Acts of God Risk. All these events can significantly disrupt not only the economy and market conditions, but also exchanges, trading, our vendors’ services, the performance of the companies in which we invest and their competitors, and our ability to carry out our investment advisory business, as well as making our employees, vendors and market participants more susceptible to cyberattacks
  3. Concentration Risk. Our investment strategy involves a high concentration in certain market sectors, industries, geographic regions, and number of issuers.  A concentrated portfolio is subject to greater risk of loss and market impact than a more diversified account.
  4. Consumer Discretionary, Consumer Staples and Technology Sectors Risk. Our discretionary client portfolios are concentrated in these sectors, which are highly sensitive to rising inflation, increased interest rates, pandemics, wars, and other events that impact consumer confidence and behavior.  The consumer discretionary and the technology sectors are especially tied to the strength of the economy. Moreover, the technology industry is very sensitive to rapid and often unforeseeable innovation and product obsolescence.
  5. Cybersecurity and Other Technology Risk. We rely heavily on technology to perform our functions and also share sensitive, confidential information with client consultants, investment advisers and custodians, as well as with other third-party service providers such as broker-dealers, software providers, network administrators, and other parties we engage in the client service, operations, legal/compliance, marketing, and Firm accounting areas, among other.  Thus, client and Firm sensitive, confidential data on our network or on the networks of third parties with whom we have shared data are vulnerable to inadvertent disclosure and nefarious cyberattacks aiming to expose or exploit the data.
  6. Equity Securities Risk. We invest in equity securities, which involves several risks.  Their value can decrease, potentially dramatically, in response to many factors (including general economic conditions, inflation, changes in interest rates, fluctuations in foreign currencies, and national or international political, social, governmental, tax, legal, regulatory and economic events, as well as natural disasters, environmental calamities, terrorist attacks, wars, and health crises such as epidemics or pandemics) that can negatively impact the economy in general or a particular company’s financial situation, result in poor performance of some companies in certain geographical regions or economic sectors or industries, and/or adversely affect the stock market in general or overall market sentiment.  Even under favorable market and industry conditions, a company’s performance can be negatively impacted by internal factors, such as poor execution by company management, a cybersecurity attack or data breach, and a change in the demand for its products or services.
  7. Foreign Security Risk. Our discretionary client portfolios generally include foreign companies.  Investing in foreign companies exposes clients to political, social, economic, legal and currency factors or other issues relevant to the corresponding foreign countries or regions.
  8. General Economic and Market Conditions Risk. The success of our Firm and the companies in which we invest will be affected by general economic and market conditions, such as inflation, interest rate fluctuations, a recession, the availability of credit, economic uncertainty, changes in laws, supply chain issues, labor shortages, trade barriers, currency exchange controls, energy and commodity prices, national and international political circumstances, natural disasters such as environmental calamities, and regional, national and global health crises.
  9. Credit Risk. Financial intermediaries and security issuers can experience adverse economic consequences, including impaired credit ratings, default, and bankruptcy or insolvency.  All of which can cause adverse events, such as trading disruptions and credit events that can impair or erase a client’s investment.
  10. Legal, Tax, and Regulatory Risk. We are a registered investment adviser regulated by the SEC.  As a regulated entity, changes in laws or regulations can impact our ability to operate our business.  In addition, legal, tax and regulatory developments can adversely affect the companies in which we invest or the regulatory or tax treatment of client gains.
  11. Liquidity Risk. In times of turbulent or uncertain market conditions liquidity risk for our client portfolio increases as there can be fewer market participants, or no market participant, willing to pay a stock price that is not deeply discounted from the price we paid when we invested in the stock, or willing to pay a stock price that we deem reasonable for the securities we own.
  12. Low Cash Balances Risk. Our investment strategy generally involves maintaining very low levels of cash (including cash equivalents selected by the client or the client’s custodian) in client accounts, meaning client accounts are typically nearly fully invested.  Therefore, client portfolios will likely be more impacted by market fluctuations than portfolios that are less invested and keep more cash available.  In addition, client withdrawals of cash from an account will most likely require the sale of securities which can be at a time when prices are not favorable.
  13. Market Capitalization Risk. Although we typically invest in large capitalization companies, we have demonstrated a willingness to go down the capitalization scale.  When moving down the capitalization scale, stock liquidity risk can significantly increase as the market for the stock can shrink and the stock price can decline, particularly in turbulent markets.  In addition, small and mid-capitalization companies tend to be more volatile or vulnerable to adverse company specific or general economic conditions than large capitalization companies.
  14. Material Non-public Information Risk. There can be instances where we receive non-public information, voluntarily or involuntarily.  In such cases, we will act in accordance with our policies and procedures relating to insider trading and determine whether the information constitutes material non-public information or is likely or possible to be considered so with the benefit of hindsight.
  15. Reliance on Key Personnel Risk. Our CIO and sole Portfolio Manager is considered a key person with respect to our investment strategy.  Although other experienced Firm-partner members of the investment team can make investment decisions, the unforeseen absence of our CIO can impair our ability to successfully implement our investment strategy.
  • Information provided on this website may be estimated.    It should not be relied upon for tax preparation.    Official records for client accounts are maintained by their respective custodians.
  • Each investment service or related product referred to on this website is intended to be made available only to U.S. residents located in states where HSMP is authorized to transact business as an investment adviser.    This website should not be considered a solicitation for or offering of any investment service to any person in any jurisdiction where such solicitation or offering would be illegal.
  • The information provided on this website is for informational, educational and non-commercial purposes only and should not be construed as investment, financial, legal, tax or other advice.   Although we may provide on this website data, information or content relating to investments or investment strategies, nothing presented on this website or in any report or other materials posted on or linked to this website, constitutes investment advice or a solicitation, recommendation, endorsement, representation of suitability or offer by HSMP to buy or sell any security or investment product.    Nothing on this website should be used as the basis for making investment decisions.
  • This website includes general information and has not been tailored for any specific recipient or recipients.  Accordingly, the information presented on this website is not intended to cause HS Management Partners, LLC to become a fiduciary within the meaning of Section 3(21)(A)(ii) of the Employee Retirement Income Security Act of 1974, as amended or Section 4975(e)(3)(B) of the Internal Revenue Code of 1986, as amended.
  • All information on this website concerning our Firm, our personnel, our investment strategy, fees, risks, and related matters is qualified by and should be read in conjunction with our Firm Brochure (ADV Part 2A), which is also available on the SEC’s website at www.adviserinfo.sec.gov (CRD Number 145480).
  • GIPS® is a registered trademark of the CFA Institute.    CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein.   S&P 500® Index is a registered trademark of Standard and Poor’s Financial Services LLC, a division of the McGraw-Hill Companies, Inc.   Standard & Poor’s is the owner of the trademarks, service marks, and copyrights related to its indexes.  Neither Standard and Poor’s nor CFA Institute endorses, promotes, or sponsors HSMP.