Financial markets can be volatile, and short-term market sentiment often causes economically strong companies to trade below what we think they’re worth. Over time, however, business fundamentals win out, and eventually the values of companies are driven by how well their businesses perform. We stick to our fundamental research process to identify companies that are trading below their intrinsic value, and think independently of the market’s prevailing sentiment.
We will sell out of a position entirely if we think a company’s products or services will be less relevant in the future than they are now, or if there is significant deterioration in the company’s sustainable competitive advantages, industry dynamics or quality of management / governance. The investment team constantly monitors our investments to ensure that we have just as much discipline when we sell as when we buy.
Derivatives are financial instruments that derive their value from underlying assets, such as shares or bonds, or from other factors, such as market indices, interest rates or currencies.
They provide an efficient means to gain exposure to, or hedge against, changes in the value of the underlying investments. Derivatives can be used to manage portfolio risk, enable greater flexibility, reduce dealing costs and enhance returns.
Smart use of derivatives can broaden the opportunity set for portfolio managers, and enhance portfolio returns for investors. We understand the investment rationale for these strategies and the implementation nuances required to achieve the desired results.
A focus on credit quality helps us assess the relative value of potential investments, while seeking to add excess returns through security selection and sector rotation. We rely on the strength of our research team to identify quality securities through this rigorous, detailed analysis.