Three investment beliefs

1. Inefficient markets

Efficient market hypothesis Mandelbrot
All relevant information is already
priced into a security today
  • Stock prices takes a period of time to absorb new information
  • “When confronted by bad news, some quick-triggered investors react immediately while others, with different financial goals and longer time horizons, may not react for another month or year. Whatever the explanation, we can confirm the phenomenom exists.”
  • “The key is spotting the irregular, the pattern is the formless.”
Each price change is independent of the last
  • “…price changes are not independent of each other. Research over the past few decades… shows that many financial price series have a ‘memory’, of sorts. Today does, in fact, influences tomorrow.”
  • ”…different kinds of price series exhibit different kind of memories. Some exhibit strong memory. Others have weak memory. Why this should be is not certain; but one can speculate. What a company does today – a merger, a spin-off, a critical product launch – shapes what the company will look like a decade hence; in the same way, its stock – price movements today will influences movement tomorrow.”

2. ‘Relative value’ approach

Our portfolios are typically valued biased. In most parts of the market cycle, our portfolios will display value characteristics above those of the

How do we achieve this?

By comparing a stock’s current valuation to its historical valuation and to the valuation of other stocks. Our process therefore results in a
‘relative value’ (rather than absolute) biased portfolio.

3. Top-down thematics and bottom-up research

“We focus on change and we think deeply about its implications. The key change catalysts we identify are: political, economic, sector, company and market changes and their second and third-order effects. The potential impact of these effects is what informs our portfolio positioning.”

Will Riggall

Change catalyst

  • Political
  • Economic
  • Sector
  • Company
  • Market

2nd order effects

  • Suppliers’ suppliers
  • Competitors’ responses
  • Different asset classes

3rd order effects

  • Consumer responses
  • Government responses
  • Management behaviour
  • Regulator responses