Clarity of purpose, Breath and Focus
\nUsing fundamental analysis focused on their industries worldwide, portfolio managers must identify investment that can double in value over 5 years.<\/p>\n
Expertise, Understanding and Passio<\/strong> Independence, Collaboration and Peer Review<\/strong> Responsibility, Accountability and Compensation<\/strong> Deep industry knowledge<\/strong> Literature review, industry maps and valuation screens<\/strong> Growth hypothesis and detailed modeling<\/strong> Management, client and supplier interviews<\/strong> Investment decision with peer review<\/strong> Trading<\/strong> Continuous monitoring and validation<\/strong> Meaningful movements in price or valuation<\/strong>
\nOur 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.<\/p>\n
\nPortfolio 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.<\/p>\n
\nAdding, 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.<\/p>\nAnalysis<\/h2>\n
\nPortfolio 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.<\/p>\n
\nIndustry 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.<\/p>\n
\nHypothesis of how industry and leading companies might grow is developed. Product offerings, prices, service levels, technologies, input and output sensitivities, competitive positioning \u2026 are compared. Multi-year forecasts of income, cash flows and balance sheet statements are prepared. Discounted cash flow models are built.<\/p>\n
\nSenior 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.<\/p>\nDecision<\/h2>\n
\nExplain 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.<\/p>\n
\nOrder quantities are prepared in accordance with target weights and each client mandate. Trading strategy is overseen by designated senior portfolio manager.<\/p>\n
\nCompany progress is tracked to confirm investment thesis is playing out over time and adjust views in accordance with changes to longer-term outlook.<\/p>\n
\nImportant 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.<\/p>\n