As value investors, we seek companies trading at a price fractional of their liquidation or fair values. We believe that over time, the price of the security will eventually reflect the fair value of the underlying business. We use a mixture of quantitative analysis, fundamental research, behavioural insights and the emphasis on capital cycles.
At the heart of our investment philosophy, is our emphasis on the capital cycles. It is based on the idea that the prospect of high returns will attract excessive capital; hence huge competition, just as low returns repel them. The resulting ebb and flow of capital affects long-term returns for shareholders in often predictable ways, what is termed as the capital cycle. We aim to identify sectors taht are in its down cycle and that are starved of capital. This is followed by detailed research-based analysis of the fundamentals of the companies and behavioural insights within this sector to uncover publicly-listed companies that are selling at a significant discount to its intrinsic value historically.
Given the contrarian and long-term nature of the capital cycle, the strategy results in strong views versus the market and long holding periods (3 - 5 years). Such a disciplined and patient deep value investing approach allows us to seek superior risk-adjusted returns with limited volatility.It is our belief that if we can minimize our losses; the winners will take care of themselves. This also explains our propensity to favor businesses that are backed by substantial asset values. They are in our experience more reliable determinants of value than projected earning.
The fund is diversified across countries and industries in 20 - 30 companies at any given time.