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.