INVESTMENT PROCESS
Fundamental research is the key

An efficient and disciplined investment process is acknowledged to be crucial in the delivery of consistently superior investment results. Our research process is designed to identify undervalued securities and combine them in low-risk diversified portfolios. We begin our analysis by sifting through thousands of listed companies, using a variety of valuation techniques to find those that have potential to provide the most reliable absolute returns to investors. All the investment partners are trained analysts with many years of experience of picking undervalued stocks.

Our approach is a painstaking and rigorous one. Within the context of the company's operating environment we project the earnings, cash flow and balance sheets for all potential purchases at least five years into the future. We use these forecasts to determine the intrinsic value of the company. The estimated discounted value is then compared to the current price of the securities. Only those where we perceive a substantial gap between intrinsic value and the current share price are likely to be purchased. The fewer constraints that are put on this process the greater the potential total return. There is nothing formulaic about the process, however. Security selection ultimately rests on the experience and judgement of the managers.

The global stock lists that result from the screening process are reviewed for risk and investor suitability before being assembled as portfolios. Such an intensive research process, the insistence that funds can only buy securities that are clearly undervalued on an absolute basis means that the most important single risk faced by investors is simply that our investment analysis is wrong. For that reason, the assumptions made in our choice of securities and portfolio construction are rigorously tested. Portfolio review, risk analysis and performance attribution are carried out as a matter of course, but primarily for monitoring purposes, not as the driving force of the investment process itself.