Our trading strategy seeks to achieve attractive, risk-adjusted returns by opportunistically assembling and managing a concentrated portfolio of deep value and special situation securities in accordance with a pre-defined set of trading criteria.
Central to the strategy’s systematic approach is the identification of high performance companies with substantial asset values or business franchises whose securities are trading at substantial discounts to their long-term intrinsic value usually due to short-term adversity or uncertainty.
The components of our strategy can be summarised as follows:
- Markets: we primarily concentrate on developed markets within North America and Europe.
- Assets: we invest in industries, companies and assets that have a long term record of achieving high returns on capital but whose securities are currently viewed as unfavourable.
- Securities: our portfolio may include equities, fixed income, commodities, currencies and derivatives.
- Research: we employ a bottom-up, value-orientated research approach focused on identifying opportunities that will provide long-term principal appreciation and preservation of capital. Our analysis depends in roughly equal measure on the qualitative factors affecting an asset and its industry characterisitics, and a quantitative process to understand what has driven its historic rates of return and assess its ability to sustain similar or increased returns in the future.
- Concentration: we maintain a concentrated portfolio of approximately 30 individual securities.
- Liquidity: we only trade in highly liquid securities and maintain a sizeable cash position at all times to enable us to take advantage of new opportunities.
- Leverage: we may employ significant leverage of up to 3x our shareholder capital.