Structuring Principles

Clarity of purpose, Breath and Focus
Using fundamental analysis focused on their industries worldwide, portfolio managers must identify investment that can double in value over 5 years.

Expertise, Understanding and Passio
Our engineers, geologists, pharmacists, etc., have the education and passion necessary to develop a deep knowledge and understanding of the issues facing their industries and companies.

Independence, Collaboration and Peer Review
Portfolio managers are free to choose the companies they analyze and the recommendations they make. They are given time to do the work thoroughly. Exchanges of information and ideas in a collaborative environment are rife. Investment proposals are peer reviewed to ensure adherence to the firm`s investment principles, and to reinforce cross pollination and mentoring.

Responsibility, Accountability and Compensation
Adding, retracting and monitoring companies in their industries are the responsibility of the portfolio managers. Absolute and market relative returns measure success. Compensation is mostly deferred and made up of long term bonuses which are invested either in the firm or funds managed by the firm. This ensures an alignment of interests between clients and portfolio managers.

Analysis

Deep industry knowledge
Portfolio managers develop a high level of understanding of their sector. This includes an appreciation of historic, current and future drivers of demand and supply, product developments, technology changes, geographic expansion and other influences.

Literature review, industry maps and valuation screens
Industry studies, economic data and annual reports are reviewed Leading franchises and respective market shares are identified. Numerical databases are screened using traditional measures of price/earnings, EBITDA to enterprise value, price to book, enterprise value to revenue, dividend yield, etc.

Growth hypothesis and detailed modeling
Hypothesis of how industry and leading companies might grow is developed. Product offerings, prices, service levels, technologies, input and output sensitivities, competitive positioning … are compared. Multi-year forecasts of income, cash flows and balance sheet statements are prepared. Discounted cash flow models are built.

Management, client and supplier interviews
Senior management of leading and targeted companies are engaged to understand their business philosophy and strategy. Talk to clients and suppliers. Solicit outlook, confirm industry and company dynamics, objectives, plans, competitive environment, future challenges and opportunities.

Decision

Investment decision with peer review
Explain to the investment team the principle reasons motivating the investment proposal and answer follow-up questions. Meetings occur weekly or more frequently if required. Purchase price and portfolio weight are fixed.

Trading
Order quantities are prepared in accordance with target weights and each client mandate. Trading strategy is overseen by designated senior portfolio manager.

Continuous monitoring and validation
Company progress is tracked to confirm investment thesis is playing out over time and adjust views in accordance with changes to longer-term outlook.

Meaningful movements in price or valuation
Important price or valuation changes are flagged by the portfolio managers. A review of issues with a senior portfolio manager with input from the trading team will normally address questions raised and minor adjustments of 10-30% to existing positions may be decided.

Major movements in price or valuation
Complex issues and recommendations for major changes to company weights are refereed back to the investment committee for full peer review and resolution.