Our Active Investment Strategy

A Disciplined Research Process

Our objective is to achieve better than broad stock market returns over a multi-year period, through all phases of the market cycle. Our US equity investment strategy targets a return greater than 2% p.a. net of our fees above the S&P 500 index over rolling 3-year periods.

Our investment strategy incorporates a disciplined research process intended to include a thorough understanding and analysis of each company's fundamental and intrinsic value, coupled with an appreciation for the macro environment, economic cycles, and other key factors such as public policy, industry, and political developments. We take a directional view utilizing our deep knowledge of companies and industry sectors and leveraging our analysis performed on one investment to make other investments.

We Look For Companies That Exhibit These Characteristics

Simple and easy business models

We never invest in any company we can’t explain in relatively simple terms.

Dominant in its industry

Companies that have been through periods of recession and emerged stronger.

Superior returns on capital

Companies that achieve high margins. 

Sustainable competitive advantages

 

These protect the company from the competition and allowing management to increase prices above inflation without losing market share. 

 

Free cash flow generation relative to the price

 

Companies that create excess cash over and above the business’ annual capital requirements.

Free cash flow volatility

 

Ideally, companies will display low volatility of cash flows, which provides a level of certainty.

 

Growth in cash flows

 

Free cash flows should display growth over time.

Strong Balance Sheet

 

Companies with sensible gearing levels.

 

Quality Management

 

Companies with a proven track record of outstanding performance. Management should display honesty, intelligence, and integrity.

 

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