We aim
to generate absolute returns with a low risk of capital loss over the long
term.
We keep it simple, sticking to the basics...
fundamentals, fundamentals, fundamentals!
- Fundamental value orientation – bottom-up analysis with
top-down industry work
- Identify pockets of structural inefficiency – material variances from
intrinsic value with an attractive valuation relative to the underlying
quality of a company.
- Short
selling/underweight position as an important source of alpha – absolute return generation as opposed to position/market
hedges. Significant returns have been generated on short/underweight
positions.
- Intensive research process – creativity and unique
primary research drives independent thinking and high conviction ideas.
- Concentrated portfolio of best ideas – portfolio
comprised of the most compelling ideas.
Our investment process is firmly rooted in fundamental analysis. We use
a predominantly bottom up approach and are sector or theme specific.
Every company is different and
influenced by its own unique factors, hence the need for in-depth research and analysis, regular
management contact, site visits, broker and company presentations, etc. We
spend a considerable amount of time 'on the road' towards achieving this end.
Special attention is devoted to companies that are either under-researched or
not at all covered by the investment fraternity.
Our research is not limited only to
listed companies.
We continuously develop our knowledge and relationships with many unlisted
companies, who are either trading partners or competitors with their own listed
counterparts.
Our strength lies in our ability to
integrate the information which we continuously gather in order to formulate
medium to long term investment ideas for these funds. We maintain our own financial
models on most of the listed companies. Because they form the backbone of our
decision making process, these models are updated and enhanced regularly.
The investment universe ranges
across all industries and market capitalisations. Portfolio 'churn' is low.
Significant stakes may be taken in individual shares or exposures in certain
sectors from time to time.
Hedging and shorts
Short positions are in the main stock-specific short.
Index shorts are employed to provide further downside protection from market
risk. There is limited
use of both quantitative techniques and technical analysis in the formulation
of our strategies. Derivative structures are employed from time to time to
overlay the portfolios with further protection and to optimize the risk to
return expectations of specific positions.
