Investment Philosophy & Strategy
We are long-term, patient investors, taking stakes in high quality, listed companies with outstanding managers. We have a rigorous, proprietary research-driven investment process.
By these means, we aim to achieve returns that materially outperform the market with lower volatility. As at October 2017, our European long-short fund has outperformed the market by a compound of 5% per annum since inception.
We seek economic characteristics of: above average growth; pricing power; recurring revenue; strong balance sheets; low capital intensity; and ability to invest counter cyclically, thus accelerating market share gains in a downturn. We do not invest in companies whose business models we cannot understand or whose potential success is overly dependent on macro factors or affected by regulatory interference.
We have a very long holding period. This is important given our belief that the best outcome is achieved by holding great businesses for the long term.
Outstanding management teams
We feel lucky to be associated with the highest quality managers, in terms of both ability and integrity. We place strong emphasis on a positive and productive relationship, frequently offering to share the findings of our proprietary market research.
We have an analytical approach, driven by in-depth fundamental research. Our multi-disciplinary team includes substantial experience in equity analysis combined with forensic accounting, behavioural intelligence, interview techniques and social media research. Our internal market research team speaks a total of seventeen languages, enabling us to collect proprietary information globally.
Long bias with market hedging
Our focus is on achieving consistently good returns, aiming to beat the market when it goes up and to have a lower drawdown when it goes down. We have a long bias and do not try to protect small market moves, instead using put options as a market hedging overlay.
Alignment and minimizing risk
We espouse a strong culture of compliance, risk management and ethics. We believe in prudent use of leverage. Since launch, our average net exposure in our European Long-short fund has been 74% on a beta-adjusted basis. Our partners are significant investors in our funds, which ensures a healthy alignment of interests with our external investors.