Investment Philosophy and Strategy

The best investment opportunities are found in well managed companies with strong business fundamentals that can be purchased on attractive terms.

In assessing a potential investment the Manager seeks the following attributes:

• A history of superior returns on capital employed in the business through the economic cycle;
• Management with a track record of creating and distributing value to shareholders; and
• Businesses with a capacity to grow.

Consistent with these basic principles, in selecting securities to short sell:

We are looking for poorly managed companies with weak fundamentals, where their securities can be sold for more than they are worth.

Investment Strategy

The Manager follows a disciplined investment process allowing the identification of leading Australian public companies that are undervalued by the market. 

While the market is generally proficient at valuing companies, it is by no means perfect. From time to time mis-pricing of shares does occur providing opportunities to acquire good companies on attractive terms. 

The Manager's investment process looks to identify mispriced securities by taking advantage of some important shortcomings of the share market:

• Investors are myopic looking for short term rewards. The value of a business however should be considered in the context of its longer term potential; 
   
• Investors are unduly influenced by sentiment, overreacting to good and bad news pushing the price of shares away from fair value;
   
• While the price of shares reflects the conventional thinking of investors generally, we know from experience the conventional wisdom is often wrong; and 

• The likelihood of mispricing is greatest during periods of significant change as investors are often slow to appreciate the full consequences of these events.