We
aim to generate absolute returns with low risk of capital loss over the long
term.
Keep it simple, stick to the basics...
- Fundamental
value orientation – bottom-up analysis with top-down industry
work
- Short selling as a primary source of alpha – absolute return generation,
as opposed to position/market hedges. Outsized returns have been generated
on the short side.
- Intensive research processes – creativity and unique
primary research drives independent thinking and high conviction ideas.
-
Concentrated portfolio of best ideas – allocating time and
resources to the most compelling ideas.
Our investment process is firmly rooted in fundamental analysis. Our
approach is predominantly bottom up and sector or theme specific.
Every company is different and is
influenced by its own particular 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. Additional
attention is devoted to companies that are either under-researched, not covered
by sell side analysts or otherwise those businesses considered out of favor
from time to time by the investment fraternity. There is limited use of both quantitative techniques
and technical analysis in the formulation of our strategies
Our research is not limited to only listed
companies. We continuously expand our knowledge and contacts base with
many unlisted companies, who are either trading partners or competitors with
their 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 the funds. We
maintain our own financial models on the majority of the listed companies in
our investment universe. We update, enhance and tweak those models regularly
as they represent the primary tools in our decision making process.
The investment universe spans
across industries, market capitalizations
and through the use of a number of different investment instruments. Those
include not just listed shares, but also listed commodity ETF’s, listed
corporate debt issues, index futures and listed options. Portfolio 'churn' is low.
Significant shareholdings may be accumulated in individual companies or material
exposures achieved in certain sectors from time to time.
Hedging and shorts
Short positions are generally stock specific.
Index shorts may be employed to mitigate market risk. Derivative structures, e.g.
put spreads, are employed, from time to time, to overlay the portfolios with
further protection or to optimize the risk-to-return expectations of specific
positions.
