Philosophy

Opportunities arise when market prices deviate from intrinsic value
We focus on valuing expected long-term cash flows rather than predicting the future or reacting to newsflow. We believe excess returns often arise from areas of neglect and disfavour and we particularly aim to avoid crowded optimism. In a world that is obsessively focused on the short term, we believe our long-term orientation enables us to look through the noise of self-reinforcing cycles of enthusiasm or negativity – a robust competitive advantage.

We make investment decisions based on mispricings we observe in the market. Simply put, we buy investments at prices well below our estimation of their intrinsic value, hold them while they deliver strong cash returns and until they can be sold above this value.

The future is never certain
There is considerable danger in operating with the comfort of a false sense of certainty. This can lead to overreactions in the market and a distorted evaluation of new information. This drives us to think more deeply, to work harder and to be more alert. We therefore view the future in terms of probabilities, exploring alternative scenarios and potential asymmetries, diversifying our positions and hedging risk.

Process

We follow a ‘bottom-up’ investment process to harness our investment philosophy in a disciplined, yet flexible manner – enabling creative and rigorous thinking.

Original research in pursuit of attractive investment opportunities
Most of our time is spent undertaking in-depth company, industry and individual security research to provide an accurate assessment of the merits of a particular investment and to identify the key drivers of its future cash flows.

We analyse information to identify the sustainable, ‘normalised’ economics that impact an investment. We strive to understand structural and cyclical forces in operation, to adjust for temporary distortions to cash flows and to conduct long-term analysis of the history of the business and industry.

Portfolio management effectively balances risks and returns
Our portfolio managers are held individually accountable for client outcomes as we believe this leads to better decisions. They maintain a patient, long-term outlook to constructing well-diversified portfolios, balancing expected returns from mispricings, perceived risks and available portfolio holding size.

We pay careful attention to risk management and positioning for asymmetric potential results.