We adopt a long term “bottom-up” approach to investment. Bottom–up stock picking involves assessing how a particular company will perform over a given period. If its potential performance appears strong, we then assess the outlook for its industry and finally the overall economy.
We believe that equity markets are inefficient and, therefore, offer excellent investment opportunities over time. The inefficiencies arise due to excesses in investor emotion, short term investment horizons and disproportionate focus on one of the least important aspects of a company’s financial health – its profit and loss statement.
In our view, objectivity is crucial to sound investing. It is possible to benefit from market inefficiencies by focusing on logical, ordered and objective investment decisions based on known facts.
We aim to buy shares which we believe are underpriced and expect to grow at rates greater than the market. Our strategy is to favour well-managed, good value companies that have significant growth opportunities through their comparative advantage.
This comparative advantage can be via a combination of a better product or service, a more efficient organisational model, a favourable niche or a commanding leadership position within their industry. In our view, a good business requires good products, services and execution.
The key to identifying these investment opportunities lies in our extensive insight and analysis of companies and the industries to which they belong. We achieve this through an intense company visitation program, as well as proven valuation techniques and models used by our experienced investment professionals.