i.
Look beyond the narrative
We focus on measurable supply data, not short-term demand narratives. This perspective naturally favours a long-term approach.
As markets and most asset managers have grown ever-more concentrated, we have maintained our diversification discipline.
Our approach allows us to look truly different to the index and peers, enabling us to take more non-correlated, idiosyncratic risk, while lowering downside volatility.
A diversified portfolio expressing bottom-up idiosyncratic ideas. Lower downside volatility. Genuinely differentiated from the index.
Concentrated portfolios. Crowded trades. High correlation to the index. Conviction expressed as singular bets.
High returns tend to attract capital and invite competition, until over time they are competed away.
Returns fall to a point where capital is eventually withdrawn through obsolescence, bankruptcy or industry consolidation, at which point returns begin to recover and the cycle begins again.
The prospect of high returns makes investors optimistic. Capital flows in, competition rises and share prices appreciate ahead of fundamentals.
As competition rises, returns fall below the cost of capital, share prices underperform and over-investment begins to strain industry margins.
As industries consolidate and firms exit, investors become pessimistic. Capital is withdrawn through obsolescence, bankruptcy or consolidation, and low returns repel new capital.
As supply-side conditions improve, returns rise above the cost of capital, share prices outperform and the cycle begins again as returns recover.
At the top, where advantage persists; at the bottom, where capital has fled.
Businesses whose competitive advantages allow them to sustain high returns for longer than the market thinks is likely.
Businesses where capital has been withdrawn and returns are likely to recover more quickly than the market is pricing in.
Five autonomous portfolio managers · One global portfolio
Our multi-generational, multi-counsellor model is comprised of five portfolio managers, each independently managing their own sleeves, which are aggregated into a single portfolio.
We avoid consensus and distribute decision-making to the autonomous portfolio managers, enabling an unconstrained and contrarian approach.
Our portfolio comprises c.400 stocks, representing a smaller number of core ideas and a tail of idiosyncratic opportunities, where bottom-up stock selection connects to our broader capital cycle perspective.