Global Permanence
Global Permanence

Global Permanence

 
 
 
Summary

The investment team makes long-term investments in unique companies whose market value can increase significantly over time for underlying fundamental reasons. Morgan Stanley Global Permanence focuses primarily on established companies globally that benefit from efficient scale. Due to the durability of this long-term competitive advantage, the investment team believes these companies are relatively insulated from disruptive change.

 
 
Investment Approach
Philosophy

Counterpoint Global believes that it may achieve value-added  investment results more consistently through bottom-up analysis  and qualitative judgment rather than through top-down  forecasting. Additionally, the team holds that optimal stock  selection is primarily a function of making long-term investments  in companies with: inherent sustainable competitive advantages  (such as a patent portfolio, a network or community effect, etc.);  brand-name recognition; the ability to redeploy capital at high  rates of return; and strong free-cash-flow yield three to five years in  the future. These characteristics, in the team’s view, provide the  potential for consistent long-term growth and competitive returns.

The team believes that the development of insights is valuable to  the investment process, and guiding principles combined with  intellectual and process flexibility are critical to strong decision-  making in pursuit of attractive investments.

 
Differentiators
ALIGNED WITH CLIENTS

Counterpoint Global’s long-term incentive compensation  program requires investors to allocate a significant portion  of deferred compensation into the portfolios they manage.

CROSS-DISCIPLINARY THINKING AND RESEARCH INTO EMERGING THEMES

Their generalist approach and disruptive change research  are unique in an industry that leans toward specialization.  They promote cross-disciplinary thinking where investors  follow areas with distinctly different business models.

CULTURE

Counterpoint Global has a distinctive culture that  encourages innovation, evolution and continued learning.

EXPERIENCED AND STABLE TEAM

The team has been managing money since 1998. They have  a long-term investment horizon that promotes perspective  and insight.

 
 
 
Investment Process
1
Idea generation

The team generates investment ideas through an ongoing set of activities  conducted individually and collaboratively, including: (i) involvement in  contact networks across industries and in the investment management  business; (ii) its reading network; (iii) its focus on return on invested capital  and free cash flow yield; (iv) team discussions; (v) the identification of  patterns; (vi) conventional-valuation and coverage biases, among others; and (vii) continual research on current company holdings.

2
Bottom-up analysis and valuation

Their quality criteria include business visibility, a diverse customer base, the  sustainability of growth and low capital intensity. Valuation focuses on three-  to five-year free cash flow yield and endgame, a five-year market capitalization  calculation.

3
Disruptive change research

To complement its in-depth, bottom-up research, the team’s disruptive change  researcher investigates big ideas and emerging themes that may have far-  reaching consequences, such as artificial intelligence and blockchain.

4
Portfolio construction and implementation

The team’s portfolios are actively managed and built to maximize expected  value. Company weightings are primarily determined by the quality of the idea  and the team’s conviction. Dennis Lynch leads decision-making along with the  investor responsible for a company and perhaps one other investor.

Counterpoint-Reading-Network
 
 
Resources
Strategy Literature