GARP (Growth at a Reasonable Price) investors try and build their portfolios with two types of securities: 1) those that are trading at a discount to the marketor their peers yet are expected to grow at higher than the market average or their peers, and 2) those whose forward PE ratio is less than, equal to, or only slightly above the long term projectedgrowth of the company. Stated another common way, GARP investors will often say they are either looking at large cap stocks whose PEG ratio (forward PE divided by 5 year projected Growth) is less thanthe S&P 500 or at any sized company whose PEG ratio is less than 1. This is a more conservative investment style in comparison to an outright growth-oriented strategy. In addition, dividend yield isgenerally not a concern of most GARP investors.
Broker-Dealers are usually trading facilitators rather than investors. Included in this group are sell-side research firms with brokeroperations, NYSE and Nasdaq trading desk positions of investment banks, investment banking client desks that execute buyback programs on behalf of corporations, private client firms that essentiallyact as custodians for high net worth individuals, and brokers that sell unit investment trusts or exchange traded products.
Hedge Fund investors have the majority of their funds investedin some sort of market neutral strategy. Notably, the term 'hedge fund' is both a legal structure (as opposed to a mutual fund) and an investment style. Nearly every firm that uses a hedge fund ormarket neutral style is legally organized as a hedge fund (and thus only open to accredited investors). Many are offshore funds that are unregistered, have no investment limitations, and are not subjectto disclosure regulations. The common element is that any long position taken in a specific equity is offset by a short position in either a merger partner (risk arbitrage), an 'overvalued' member...