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Investment Approach

Philosophy

Markets can be emotional, backward-looking, inefficent

Securities can trade below their intrinsic value

Risk can be reduced by investing in companies we understand

We believe this provides opportunities for prudent investors who make considered investment decisions based on thorough fundamental analysis.

Detailed fundamental analysis provides the potential to find stocks with strong investment returns.​ Underpinning our investment philosophy is our belief that the intrinsic value of underlying businesses is not always reflected in the market price of their securities. ​ We believe undertaking detailed fundamental analysis allows us to identify securities trading below their intrinsic value and with sound long-term investment fundamentals. It is these companies we believe are more likely to generate strong investment returns.

Knowing what we invest in means understanding the key business drivers, which involves intensive company analysis involving senior management, industry and competitive sources. ​ Our investment approach has a strong risk management focus.  Investors risk permanently losing capital by making investment decisions without a full understanding of companies they are investing in. In contrast we seek to know who and what we invest in, conducting thorough research to gain a strong understanding of a company’s key business drivers. To understand the key drivers of a business, we undertake intensive company analysis involving: senior company management,  industry factors, and competitive and industry sources.

Investment Process

We take a bottom-up benchmark unaware approach to investment

As a specialist Australian mid, small and micro cap manager, we aim to be a safe pair of hands while providing investors with access to some of the most exciting investment opportunities in the listed equity market. We purchase securities that we believe are trading below their intrinsic value and have sound long-term investment fundamentals. This maximises the potential to achieve strong and consistently positive investment returns over the long-term.

Our investment process incorporates a strong focus on risk management. We will only invest in a company once we understand the full range of risks that it presents.

We meet with over 1000 companies a year

To understand the drivers of a business, we visit or engage directly with companies and talk to management regularly. We believe this gives us an analytical advantage.

Our investment process includes 4 key steps

In the initial screen, we aim to screen out unsuitable businesses, often due to not being profitable, too small, or unproven business model. 

We rank stocks across a range of factors, such as management quality and business model. Stocks that do not meet a threshold are screened out.

We assess and rank the expected total returns for stocks, then build proprietary bottom-up stock models. 

We assess our current stocks and potential inclusions and apply any required thematic overlays or constraints. Stocks with better risk/return characteristics are held at higher weights in the portfolio.

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