Strategies
Active Fundamental Equity
Eurozone Equity Alpha Strategy
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Eurozone Equity Alpha Strategy
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Strategies
Active Fundamental Equity
Eurozone Equity Alpha Strategy
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Eurozone 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.
Strong European credentials |
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The team brings more than 100 years of combined experience managing European equities, leading to a deeper understanding of local markets and the cultural and political differences across and between different European countries. |
Dynamic process |
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The team’s flexible, style-agnostic approach enables alpha generation through the market cycle. They have a long-term view that helps them to focus on structural changes, while their process of “intelligent screening” identifies the best stocks and builds conviction-driven, concentrated portfolios. |
Proven track record |
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The key members of the European Equity team offer a compelling performance track record of delivering consistent high alpha, while minimizing tracking error. |
| 1 | Filtering and screening |
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The team screens a universe of approximately 300 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 150 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 70-100 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. |
