We believe that attempting to forecast the financial results of a company is more productive than forecasting global and regional macroeconomic data points.
We therefore devote our time and care to applying a bottom-up approach to discovering attractive investment opportunities for our clients.
Our approach is grounded in fundamental research and our analysts look for companies that exhibit the following characteristics:
- High or improving returns on invested capital
- Ability to generate strong cash flow
- Growing earnings, or where catalysts are present to improve the existing earnings power of a company's assets
- Catalysts for revaluation of under-valued fixed assets and investments
- Management track record of implementing operational goals and generating attractive returns for shareholders
We believe that the greatest inefficiencies in stock valuations often reside in the universe that falls outside the largest companies trading on a market. As such we seek out investment opportunities amongst small and medium-sized companies. This area is where we believe some of the greatest opportunities exist for our clients to generate superior returns.
No single recommendation framework will meet the needs of all our clients, given their varied mandates and diverse investment styles. However, our chosen recommendation framework best reflects our research philosophy and what we consider to be the one overriding goal of all our clients; namely to make money where a stock fails to reflect the intrinsic value of the underlying company. Where a company's stock is trading less than 10% below or above our calculation of intrinsic value, we would usually consider that stock to have been fairly valued by the market. We believe that most stocks trade at or near intrinsic value most of the time.
We believe that the price of a stock adjusts over time to reflect the intrinsic value of the underlying company. The speed of that process depends on the efficiency of market participants in understanding the future prospects of the company in question. As such, we do not impose a fixed investment horizon on our recommendations.
In addition to the publication of investment research, we can help our customers to implement their investment processes in several other ways. We can gather data from a firm's suppliers, customers and peers through a primary research project. We can help our customers to develop a more in-depth understanding of the key challenges facing a company through meeting with industry experts, regulators and politicians. We can organise field-trips to Latin America to support our clients in the execution of their due diligence processes.