Strategies
Active Fundamental Equity
European Equity Alpha Strategy
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European Equity Alpha Strategy
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Strategies
Active Fundamental Equity
European Equity Alpha Strategy
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European Equity Alpha Strategy
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The investment team believes that while markets are generally efficient, pricing anomalies exist and can be exploited. The team believes that, in the long run, a stock’s price will ultimately converge with a company’s intrinsic value, but in the short term, the market may overreact to good or bad news, resulting in price movements that may not necessarily reflect a company’s fundamentals.
In the team’s view, however, an attractive share price alone is not sufficient rationale for investment. The team also focuses on companies with strong and sustainable returns on capital and equity, as they believe this will help generate superior long-term returns for investors. In particular, the team seeks companies with high quality businesses, strong management track records and potential catalysts to help realize the stock’s intrinsic value.
High Conviction Approach |
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The team builds a concentrated yet diversified portfolio (30 to 50 holdings) that is highly differentiated from the benchmark and focused on the highest conviction ideas. Seeks a profile with lower risk than the index and with more consistent returns. |
Established Investment Process |
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Using active, fundamental, bottom-up stock selection, which is style-agnostic, the team avoids investment trends and maximize the opportunity set. They believe this approach can provide outperformance potential across market cycles. |
Stable, Experienced Team |
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The team has over 20 years of industry experience in European equity investing and is guided by a deep understanding of the local nuances and cultural differences within the European equity markets. |
| 1 | Filtering and screening |
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The team screens a universe of approximately 600 stocks using various proprietary and external screens, with a focus on profitability and balance sheet metrics (i.e., free-cash-flow yield, ROCE, ROE and net debt/EBITDA valuations), mean reversion and absolute and relative valuations. The result is approximately 300 investment candidates that display attractive valuations, strong cash-flow generation and high returns on investment. |
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| 2 | Research |
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The team uses both internal and external research to evaluate a company’s business model, capital requirements, industry structure, management quality/track record in generating and reinvesting cash-flow, and product competitiveness. As part of this analysis, the team considers economic conditions and industry trends, which may influence a stock’s long-term potential. |
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| 3 | Fundamental analysis |
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After the initial two stages, the team narrows down the universe to approximately 100 stocks and then conducts in-depth fundamental analysis on forecasts and financials—including discounted cash-flow analysis—to determine what they believe to be a company’s "fair value." This analysis is supplemented by regular meetings with company management. |
