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.