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Insider’s Guide to AVI

March 2022 - Asset Value Investors

The Insiders’ Guide to Asset Value Investors (AVI)

“If you pick the right companies, if you look behind the value, if you know where to find what’s actually driving the business, you’ll learn you can realise a company’s value potential, while at the same time identifying how it can generate long-term growth.”
Joe Bauernfreund, CEO and CIO at Asset Value Investors

At Asset Value Investors (AVI), our aim is to provide a smarter way of investing. We are investment managers with a simple goal – to deliver long-term capital growth by identifying and investing in companies with significant growth potential, and whose shares are trading at a discount to their intrinsic value.

No rock is left unturned. Our twelve-strong investment team work tirelessly to identify and understand companies which have been overlooked and under-researched by other investors. Companies which, we believe, are priced below their true market value. The companies we ultimately invest in are good quality companies which have the potential to be turned into profitable performers achieving long-term growth.


Who are AVI?

Initially formed in 1985 to take over the management of one of the oldest Investment Companies in London, AVI has spent 36 years refining and enhancing our unique investment strategy, which we describe as ‘value with a difference’. Today we offer investors a specialist, research-driven approach, with two portfolios managed in our unique style:

  • The AVI Global Trust (AGT) is a global portfolio originally established in 1889. Since 1985, AGT has been managed using AVI’s value with a difference approach, aiming to achieve capital growth through a focused portfolio, investing in companies whose value stands at a discount to their intrinsic value
  • The AVI Japan Opportunity Trust (AJOT) focuses on over-capitalised small-cap Japanese companies. Our team has over three decades’ experience in this under-researched area of the market.


Value with a difference

Our focus is on buying high-quality businesses trading at a discount, overlooked and underresearched companies which have the potential to narrow their value discount. We are stock pickers who use fundamental analysis, and we prioritise our own internal research so that we can fully understand each and every business that interests us. We look at metrics and ratios as other investors do, but we also look beyond that. We look for value companies, removing those which have high debt or other problems contributing to their low valuations. From a list of thousands of companies we quickly funnel down to a universe of around 400, ultimately deciding on a core portfolio of 20-25 companies for AGT and the same for AJOT.


Typically, we’re interested in three types of assets:

  1. Holding Companies
    Companies with a high-quality portfolio of businesses, with the potential for sustained, above average, long-term growth. We look for the presence of a controlling family or shareholder with a record of delivering returns in excess of their peers, and companies trading at a discount to NAV (the ‘Net Asset Value’ of the company).
  2. Closed-ended Companies
    We look for portfolios of high-quality assets with good growth potential. In line with our value with a difference approach, we look for companies at a discount to NAV, but in the case of closed-ended companies we engage with management to work towards high probability assurances that the discount will narrow or vanish altogether.
  3. Asset Backed Special Situations
    We look to invest in cash-rich Japanese operating companies, quality businesses with low valuations. We’ve been investing in Japan for three decades now and we see a particular opportunity in the region as companies improve their digital infrastructure – a requirement across all businesses in Japan. This, we believe, will help companies realise their intrinsic value, while also driving significant growth long-term.


A detailed approach

We aim to understand every company in our portfolios. We promote and initiate active involvement and engagement with the management of every company we invest in. We learn
about their businesses in great depth, developing close partnerships with them so we can work together on suggestions and improvements, which we believe could improve their operations and help narrow the value discount.

We’re not market timers. We look for which companies will do well based on the economics, not by guessing which way the market is going to go. We look at what’s happening within a company, and how that relates to current market conditions.

For example, towards the end of 2020 we were proactive in thinking about the potential rollout of the Covid vaccine. At that stage we were in defensive stocks which were more technology-based because of the fact everyone was locked down and working remotely. Then we rotated into the type of stocks which we felt would recover as the economy started to return to normal.

Our value with a difference strategy has served us well for over three decades. Our experienced team of investors are highly skilled in picking the right companies, in identifying businesses which can release their value potential while at the same time generating long-term growth. It’s a strategy which has provided annualised NAV total returns of 12.1%* for AGT since 1985. It’s an approach decades in the making, and it works for us.

*Source: AVI/Morningstar CUM Fair Value Total Return as at 31 January 2022.

 

 

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AVI Global Trust p.l.c is referred to as ‘AVI Global’ throughout the website. AVI Global’s investment managers, Asset Value Investors are referred to as ‘AVI’

AVI Global currently conducts its affairs so that its shares can be recommended by Independent Financial Advisers (“IFAs”) in the UK to ordinary retail investors in accordance with the Financial Conduct Authority (“FCA”) rules in relation to non-mainstream investment products and intends to continue to do so. The shares are excluded from the FCA’s restrictions which apply to non-mainstream investment products because they are shares in an authorised investment trust. © AVI Global Trust plc. 2019 Registered in England No: 00028203. An investment company under Section 833 of the Companies Act 2006. Registered Office: Beaufort House, 51 New North Road, Exeter, EX4 4EP. Managed by Asset Value Investors Ltd. which is authorised and regulated by the Financial Conduct Authority. Past performance should not be seen as an indication of future performance. The price of investments and the income may fall as well as rise and investors may not get back the full amount invested. AVI Global uses gearing techniques (leverage) which will exaggerate market movements both down and up which could mean sudden and large falls in market value. Please refer to the Key Features Document for further details of the risks affecting your investment. Performance figures are cumulative and based on Price total return and do not include Plan charges. For more information, please call 03458 500181. Tax treatment depends on the individual circumstances and may be subject to change in the future. Asset Value Investors Ltd do not offer Innovative Finance ISAs.

Disclaimer

The website is directed only at Professional Clients in the UK. The website is issued by Asset Value Investors Limited (“AVI”), in respect of AVI Global Trust plc (“AVI Global”). AVI is authorised and regulated by the UK Financial Conduct Authority (“FCA”). AVI Global is a public company listed and traded on the London Stock Exchange.

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The price of the Shares will be determined by supply and demand in the market as well as NAV per Share. The market price of the Shares is therefore likely to fluctuate and may represent either a premium or discount to NAV per Share.