Vitality

Overview
Investment Approach
Investors
Insights

Overview

Strategy Facts

Capability:	Active Fundamental Equity
Benchmark:	Russell 3000 Health Care Net Index
Team Inception:	December 2021

Strategy Facts

Capability:	Active Fundamental Equity
Benchmark:	Russell 3000 Health Care Net Index
Team Inception:	December 2021

Summary

Morgan Stanley Vitality seeks long-term capital appreciation by investing primarily in healthcare companies in the United States, principally engaged in the discovery, development, production, or distribution of products or services related to advances in healthcare, and that we believe have sustainable competitive advantages, strong research and development and productive new product flow, financial strength, and an attractive risk/reward profile.

The team focuses on long-term growth rather than short-term events, with their stock selection informed by rigorous fundamental analysis.

>90%

TYPICAL ACTIVE SHARE

>90%

TYPICAL ACTIVE SHARE

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.