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We are a disciplined Australian equities value manager that has been managing Australian equities since we were established in 1984. Over time we have made refinements to our investment process, however our commitment to value investing remains unchanged.
Our investment philosophy
We are value investors
We believe that the price and value of a company are often not the same and deviate over time. ‘Price is what you pay, value is what you get’ best summarises this difference. Greed and fear in markets can drive a wedge between these concepts at the stock level and we seek to take advantage of this behavioural phenomenon by being patient and disciplined. We will only invest in a stock where we assess the discount to intrinsic value is sufficiently attractive.
We are bottom-up stock pickers
At the heart of our value-based investment philosophy is our approach to stock selection, driven by in-depth analysis from our expert team of investment professionals. We use our bottom-up research process to maximise the opportunities to deliver income and long-term capital growth to our investors.
We are often contrarian
In order to beat the market, one must do something different from conventional wisdom. With share prices representing the market consensus, we will often take a contrarian position and invest in companies that we believe are undervalued and will generate the strongest returns for our clients.
In regularly looking at the unloved or unpopular segments of the market, we find there is often a narrative attached as to why these stocks are out of favour. Only by researching these companies on a bottom-up basis (in conjunction with what prevailing valuations imply) can one determine whether the narrative is correct or indeed an opportunity exists.
We invest for the long-term
A key ‘ingredient’ underlying value investing is time. We believe that price and value can diverge by a wide margin over the short-term, whilst over the long-term, they are far more likely to converge. What drives this process? Some like to point to catalysts however in our experience it is more likely than not the passing of time as the ‘darling’ stocks fail to live up to expectations while the ‘value’ parts of the market deliver better results than their share prices were implying.
The holding period for stocks in the portfolio is expected to average around four years.
Our investment approach
Our well-established and rigorous investment process aims to identify companies that are currently trading at an attractive discount to their underlying value.
We utilise several quantitative screens to rank our investment universe. Stocks are ranked based on their value characteristics and their expected total rate of return over a four-year holding period. Stock ideas generated from the valuation screens then undergo in-depth research.
Our experienced team conducts detailed quantitative and qualitative analysis on these companies. Qualitative analysis includes business and industry analysis, an assessment of the quality of management, key investment issues and risks, and ESG issues.
Our Australian equity portfolios reflect our high conviction approach and generally hold between 30 and 40 stocks.
A team of experienced and dedicated investment professionals.