Investment Philosophy

Our asset man­age­ment approach is based on a com­bi­na­tion of three fac­tors: qual­i­ty, val­ue, and momen­tum.

Quality

The company has to have a convincing business model and management

Qual­i­ty, for us, means only invest­ing in good com­pa­nies. We have to be con­vinced by a company’s busi­ness mod­el and man­age­ment. The busi­ness­es we invest in must be capa­ble of oper­at­ing suc­cess­ful­ly and devel­op­ing, even in dif­fi­cult mar­ket phas­es.

Value

Market valuation plays a crucial role in successful investment

The return on an invest­ment is not just dri­ven by the company’s oper­at­ing per­for­mance; it also hinges on its stock mar­ket val­u­a­tion. We select cheap or fair­ly val­ued stocks and use phas­es of over­val­u­a­tion as a sell­ing oppor­tu­ni­ty.

Momentum

Buying and selling decisions are influenced by the trend

By momen­tum we mean the way a mar­ket or stock is trend­ing. This fac­tor helps us decide when to buy or sell. We iden­ti­fy pos­i­tive trends in mar­kets and stocks, and use sit­u­a­tions where they are extreme­ly over­sold as an oppor­tu­ni­ty to buy. On the oth­er hand we avoid or sell stocks that are in a down­trend.

We are active investors. We focus on cost-efficient, liquid investments such as equities and bonds.

Equities

Quality is the key investment factor

We focus on the qual­i­ty of the com­pa­ny. It has to have an attrac­tive busi­ness mod­el and con­vinc­ing man­age­ment. On the finan­cial side, we expect to see a sol­id bal­ance sheet, sta­ble cash flows, and sus­tained prof­itabil­i­ty. Most of all we are look­ing for com­pa­nies that invest their cap­i­tal prof­itably to gen­er­ate returns that con­sis­tent­ly exceed the costs of cap­i­tal.

Bonds

Risks have to be adequately rewarded

When select­ing bonds we con­sid­er whether the lender is able and will­ing to ser­vice inter­est and repay the prin­ci­pal. Besides the offi­cial rat­ings we do a quan­ti­ta­tive and qual­i­ta­tive assess­ment on issuers. A bond’s yield to matu­ri­ty should ade­quate­ly reward the cred­it and matu­ri­ty risks involved.

Our quan­ti­ta­tive analy­sis focus­es on eval­u­at­ing the bal­ance sheet and prof­it and loss. We look for com­pa­nies that have suf­fi­cient cash flow to cov­er their inter­est expense sev­er­al times over and are in a posi­tion to amor­tize their debts. Our qual­i­ta­tive analy­sis cen­ters on an assess­ment of the man­age­ment and poten­tial­ly dom­i­nant indi­vid­ual share­hold­ers.

We see con­vert­ibles, high-yield bonds, senior secured loans, and cat bonds as an inter­est­ing sup­ple­ment to tra­di­tion­al fixed-income invest­ments.

Non-traditional assets

A useful supplement to conventional investments

We define non-tra­di­tion­al assets as invest­ments in pri­vate equi­ty and debt, hedge funds, and infra­struc­ture, pre­cious met­als, and com­mod­i­ty invest­ments.

When assess­ing non-tra­di­tion­al invest­ments we always con­sid­er the three cri­te­ria of our invest­ment phi­los­o­phy – qual­i­ty, val­ue, and momen­tum – plus any costs, dis­closed or hid­den.