Looking across broad equity markets for opportunities with value

Goal: To build a concentrated portfolio of high conviction ideas with significantly favorable risk-return characteristics and optionality to the upside

Idea Generation

A flexible and patient approach to idea generation allows the strategy to capitalize as opportunities arise across geographies, sectors, capitalizations and individual stocks

  • Utilize a variety of sources for idea generation
  • Persistent market engagement
  • Quantitative screens
  • Internal/external sources
  • Past experience/industry knowledge

Looking to identify high quality businesses trading a discount to intrinsic value

  • Discount or dislocation often arises due to:
  • Macro event(s)
  • Structural/secular change
  • Market/industry/stock specific distress
  • Spin-offs
  • Innovation
  • ‘Short-termism’

Goal is identify as many ideas as possible to consider for potential investment

Fundamental analysis

Goal of fundamental analysis:

  • Discover great businesses
  • Determine the intrinsic value of a company
  • Understand the market’s current perception of stock price
  • Assess potential catalysts to eliminate potential discount to intrinsic value

Comprehensive focus on industry and stock specific dynamics
Industry analysis

  • Understand industry framework
  • Follow industry trends
  • Look for structural changes and inflection points

In depth, individual company diligence

  • Fundamental assessment (Cash flow/revenues, debt structure, ROIC, etc)
  • Understand the motivation of management team(s)
  • Determine the value of each company’s assets
  • Assess the trading dynamics and history of the ‘stock’

Look to take a long-term, patient approach to security selection through the combination of industry and company specific diligence

Risk-Return Analysis

  • Math exercise
  • Build a ‘structural’ case
  • ‘Margin of safety’ of price
  • ‘Margin of safety’ of the business
  • What is the potential return?
  • What is the potential risk?
  • Catalysts? Time frame?

Portfolio Construction

  • Based on individual client objectives
  • Opportunistic by market cap, style, sector or geography
  • Concentrated in highest conviction ideas
  • Risk/Return Profile – focused on efficient returns