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Board of Directors
What We Offer
Investment Philosophy
...to concentrate on finding undiscovered value among high quality assets
Discounts to underlying value
AVI is interested in finding anomalous valuations. These can be secular (lasting for a number of years, e.g. discounts on closed funds and investment holding companies) or cyclical (an opportunity to take advantage of concerns over short-term industry factors).
The purchase of assets that are of high intrinsic quality
This is a subjective judgement, but essentially implies assets for which there would normally be a ready demand, even in unfavourable conditions.
Economic Value
The underlying assets must offer appreciation potential. Historically stock market experience suggests this is best achieved by purchasing securities selling on relatively low price earnings multiples equating to high pre-tax returns on the initial investment. Wide discounts can provide this cheap access; for example, if a quoted company selling on a p/e of 15 is a constituent asset of an investment holding company selling on a 33% net of tax discount, this equates to a 15% return pre-tax.
Portfolio activity
The discipline of investing with reference to discounts helps to clarify risk / reward ratios. If we do not expect a catalyst to help achieve net asset value, we will analyse whether, if the stock has been bought on a discount of 40%, it is still attractive on a discount of, say, 20%. If not, we recycle assets into a wider discount security, subject always to asset quality and appreciation potential.
Diversification of risk
AVI often buys the securities of companies owning diversified portfolios. They may be investment holding companies owning a concentrated portfolio (in which case a number need to be owned) or closed-end funds with highly diversified portfolios. This approach limits security specific risk.
Corporate activity / constructive engagement
AVI has been involved in many discussions with Boards and Management to increase shareholder value by simple measures such as buy-backs and unitisations. Such activity always aims to be constructive and not confrontational.
Stock market psychology
The amplitude of stock trading ranges is often underestimated by investors. We try to take advantage both of periods of enthusiasm to sell, and times when simple lack of investor interest or despondency rules, to look for buying opportunities. We act positively by seeing and acting on such opportunities, rather than operating a passive approach to stocks and sectors. Moreover, if our bottom-up stock picking approach suggests a lack of good opportunities, this can dictate a measure of liquidity in our funds, which on rare occasions, such as 2000 and 2001, was a significant percentage of our assets under management.
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