The strategy and resource allocation are predominately focused on the bottom-up characteristics of the investment tenants which are grouped under headings: fundamentals, dynamics and sentiment, with an overlay that aims to reflect the relevant tenants of ESG for any particular opportunity. As such we are country, industry and size agonistic in the origination of investment ideas; however country, industry and liquidity have parameterised limits which could create constraints for bottom-up construction.
In order to be able to soundly build conviction from a bottom-up perspective, it is crucial to understand the macro environment in which a company operates, as this environment will ultimately have a major impact on the valuation drivers for the company. Much of our investable universe consists of companies that are local or regional players, therefore the understanding of local and regional population dynamics, including cultural nuances, that would drive both demand and margins is important to building convictions. Additionally, in markets where government spending is key to the growth of investments in certain industries, a clear understanding of a government’s budget and its ability to deliver on their forecasts is also necessary to build conviction.
Ultimately, we derive our own intrinsic values of companies using a series of quantitative and qualitative methods which allow for both independent dynamic valuations while simultaneously benchmarking the value across the investment universe. The process constantly re-iterates the investment and disinvestment theses to illustrate the dislocations against time, regional and industrial peers and robustness tests on fundamentals.
Not only is the selection and benchmarking of the quantitative value germane to the investment strategy is, but also ensuring relationships and bridges are built with management, competitors, suppliers etc. on creating greater confirmation of the constituents of the investment process ranging from management vision / track record, through to bottom up variables on key drivers and their ensuing drivers of variation. Ultimately, we aim to take core positions in companies with a solid shareholder base, strong management teams, and attractive growth prospects in proven business models.