Investment Process
The investment process is a cornerstone of portfolio management. We have four key strategies that work as pillars of our process with tools and insights.
What We Do
Our investment process is designed to identify businesses with robust long-term foundations that possess the dynamic ability to generate sustainable growth in value and cash flow. We base our investment philosophy on fundamental analysis, which prioritizes the long-term growth of intrinsic value over market pricing research that focuses on trading behaviors and forecasting news.
In line with our approach, we concentrate on large to mid-cap companies operating within the global market. We believe that these companies present ample opportunities for growing value creation, given their size, market dominance, and established track record.
As a responsible and committed investment firm, we are dedicated to offering our clients the best feasible investment solutions. We continually strive to stay ahead of the curve by leveraging our expertise, experience, and cutting-edge tools to deliver outstanding results that even exceed our past as our competitors.
Our Focus | Investment Process
Growth Capital
At the core of our investment strategy lies a commitment to identifying companies that experience accelerated growth in equity capital through organic means rather than through mergers and acquisitions. We believe that such growth results from robust revenue growth, which can only be achieved through implementing innovative business practices, effective marketing strategies, and efficient operations. Our investment, therefore, places significant emphasis on identifying businesses that exhibit these qualities, as we believe they are best positioned for long-term success in their respective markets.
Persistent Value
The growth of the fundamentals of a business shows a strong and consistent trend, which lasts for a longer period of time and can be predicted due to a strong foundation. The length of the investment horizon is a significant factor in determining the long-term value of the investment. The predictability and manageability of the business dynamics are the characteristics of the business model.
Shareholder Return
A group of companies that can achieve moderate capital gains possesses a unique business and financial model that is highly efficient in utilizing the invested capital. This model allows the company to generate consistent and steady cash flows, resulting in above-average shareholder returns. The capital investment requirement is both measurable and stable, meaning that the company’s financial structure is well-managed and can withstand unfavorable events that may arise. This group of companies can provide a satisfactory return on investment, making them attractive for investors looking for stable and reliable long-term investment options.
Low Price
The price of equity for this particular investment opportunity is currently low, primarily due to unfavorable expectations. However, it is important to note that the business itself is not structurally declining in the long term. Additionally, it is not a pure cycle-driven leveraged business, meaning there are other factors at play that are contributing to the current low equity price. This investment opportunity is an opportunistic and tactical chance to invest. While there is a requirement for patience and the potential for volatility, there is also a positively biased return opportunity to consider.
Construction | Investment Process
Our philosophy for portfolio construction is centered around identifying individual stocks of which we have an extensive understanding. We believe that the breadth and depth of each piece of knowledge are crucial to determining the first step in portfolio construction. Instead of figuring out and planning the final shape or characteristics of the portfolio in advance, we combine individual securities based on their duration, relationships, and the qualitative nature of the idea.
Our approach is not based on top-down allocation decisions by regions and sectors. Instead, we tend to overweight the areas where we frequently find high-quality ideas, and vice versa. We believe that this approach is effective and makes sense for us.
We do not rely on traditional multi-factor risk models as a tool to help investment decisions. However, we report it for clients to understand the advisory portfolio more easily with a note that those models have typically short term risk estimates such as only one year that is much less than the actual time horizon of most of accounts. We do not use it for the investment decision process because we believe our time horizon is different and that quantitative models are heavily influenced by short-term price movements. Integrating it with the fundamental investment process is a mix of two distinct parts. It is a tool that complements us and has a much broader scope.
The resulting total portfolio active risk is usually high single digits. When the market gets volatile, the active risk of the portfolio goes up due to the latest pickup of volatility.
Monitor | Investment Process
Investment portfolio monitoring is a crucial task that aims to keep the portfolio up-to-date and in the best possible condition, both in terms of individual ideas and overall portfolio context. Each idea in the portfolio consists of numerous individual elements that contribute to its conviction. As a result, the portfolio monitoring process focuses on keeping track of the development of essential aspects of each idea, including qualitative and quantitative factors such as KPIs and the coherence of the financial model.
We typically review our views and opinions when we find that one or more of these elements have met or exceeded our expectations, matured, or changed for some reason. This process helps us to ensure that our investment decisions are always based on up-to-date and accurate information.
Moreover, unanticipated external incidents can cause us to change our course. Therefore, we keep a vigilant eye on the market’s opportunities to identify new investment options that offer a more reasonable uncertainty-adjusted return. This approach helps us to ensure that we are always well-positioned to make informed investment decisions that deliver optimal results for our clients.
