We adopt a dynamic and holistic approach, combining both top-down and bottom-up analyses to provide more flexibility on securities selection. This would help our funds to stay resilient and adapt to market conditions.
At all times, we will adhere to the three principles below:
One, only invests in securities that offer a reasonable margin of safety. Our calculation will take into account the average valuation metrics of the past years, to ensure it captures how the company or industry evolves. The methodology is adaptable to the latest economic condition, e.g. business cycle or interest rate cycle, to ensure its effectiveness and relevancy.
Two, firmly ground investment thesis on thorough fundamental analysis particularly with regards to the company’s margin expansion or sustainability, earnings growth potential, and other profitability measures to prevent from falling into the value trap. We believe that a company able to deliver earnings will eventually thrive, not only its investment return but also its financial performance. In addition, we will extend our analysis, to the balance sheet to avoid buying into a company with earnings quality issues.
Three, commit to a long-term investment horizon of five years or longer, as we think that this is reasonable period of mean reversion of undervalued securities and the company’s business plan to have meaningful growth.
In addition, to manage environmental, social and governance (ESG) impact, our proprietary framework with reference to global standards including United Nations Global Compact Principles and Sustainable Development Goals, would be adopted to rate all securities across our portfolios.
We plan to integrate ESG analyses into our investment process and also adopt a proactive approach to encourage good ESG practices among our investee companies. We will invest selectively in companies that might be seen as ESG laggards but with potential for improvement, particularly smaller market capitalization companies of which management are receptive to active engagements
Our priority is to push for embedment of ESG goals in our organizational strategy. We hold the view that improving ESG disclosures and practices among our investee companies will lead to better financial returns for our clients over the long run.