Our Investment Philosophy
HIGH-CONVICTION GLOBAL INVESTING
Our investment approach is unconstrained by sector or geography. We take a bottom-up approach to identifying exceptional businesses with durable competitive advantages and attractive long-term growth prospects that we believe are misunderstood by the market.
For each business we establish a long-term glide path — our view of where the company's earnings and value should travel over time — and we invest as the share price deviates from that path.
We believe long-term outperformance is best achieved through a concentrated portfolio of our highest-conviction ideas.
Finding Great Businesses at Sensible Prices
The combination of a superior business model and an astute, entrepreneurial and well-incentivised management team frequently maximises the future cash flows of a business. If acquired at a reasonable price, owning such businesses provides the prospect of generating above average investment returns.
We also understand the importance of genuine earnings momentum within a business.
Our competitive advantage as investment managers is our ability to better understand the fundamental drivers of superior and inferior business models and to distinguish between exceptional, capable and poor management teams. Deeper insight into these factors allows us to invest with conviction over long periods of time in great businesses, and to avoid or short sell those inferior peers.
Managing Risk Across the Portfolio
However, the risks presented by politicians, commodity prices, interest rates, currencies, excessive systemic leverage and other macroeconomic factors are real and can have devastating impacts on asset prices. We seek to position our portfolio in a conservative manner to mitigate those macroeconomic risks. In addition, we stress test our individual investment cases to better understand how they may react in different scenarios and include this in our valuation methodology. We do not look to predict the future but rather react with pragmatism to events as they unfold.
Changing Our Minds when the Facts Change
We recognise that investment managers do not deal in certainties – “facts” are often disproved, information changes and we make errors in our assessments. We cautiously guard against biases, which can hinder incorporating the dynamic environment within which we operate. We continually evaluate new information and are flexible enough to recognize when an investment thesis is no longer valid.