Investment process

Throughout the filtering process we ask the following questions:

• Is the stock trading at the wider end of its discount range
• Are we comfortable with the NAV
• Do we like the valuations
• Do we want to own the underlying businesses
• Does the business have a strong balance sheet
• Is the company headed by an honest, intelligent management team with a good track record who is willing to engage with shareholders
• Can we see a catalyst to bring the NAV back to its true value
• Is the political and economic environment amenable

Our analysts track stock prices, earnings and balance sheet information with an aim to identify good quality companies trading on a discount to their NAV which exhibit clear trends to create long-term value. Research includes:

• In-depth analysis of company annual reports and filings
• Consulting with industry contacts and brokers
• Bottom-up analysis of a company’s fundamentals, management and industry trends
• Specific focus on identifying the catalyst which will reduce the discount and unlock value
• Regular meetings with top level management

The objective of our portfolio construction process is to end up with a concentrated portfolio of about 50-60 holdings, facilitating a clear monitoring process of the entire portfolio.

We pick stocks that meet our investment criteria and once we decide to invest we seek a minimum position size of approximately 2% of the portfolio, however the timing of the catalyst and the liquidity of the stock can result in the holding being greater or lesser than 2%.