Investment policy

The management of our SICAV is based on the value investing methodology as originally taught by Benjamin Graham and David Dodd. The approach has a worldwide reputation and has famous practitioners such as Warren Buffet, Charlie Munger, Bill Ruane, Irving Kahn and many others.

Our goal is very simple: to buy undervalued stocks and keep them in the portfolio until their value has gone up and they are considered as „overvalued“. We distinguish periods of under-, over- and correct valuation in the markets.

Our experience and academic studies have shown that the psychological effect on markets should not be underestimated. Investors often act emotionally and do not think rationally, resulting in periods moving from panic to euphoria in the stock market. This irrationality creates opportunities from which we can profit.

Within this context we position ourselves as a long-term investor who takes participations in companies. These companies will ideally meet the following criteria:

  • They must have a healthy balance sheet;
  • Offer an attractive and competitive range of products and services;
  • Be governed by a good management;
  • Offer future growth; and
  • Show consistent performance.

Additionally, the price we pay must be relatively low in comparison to the “value” and the “potential” of the investment. This price will obviously determine the future performance of our investment.

We calculate a “safety margin” in our purchase price which will allow us to escape relatively unscathed in case of any unforeseen negative circumstances.

Working with this investment strategy means we do not speculate and/or do not play at the stock market but we invest in companies which are listed on the stock exchange. We are not primarily interested in the price evolution of the stock, but rather in the favorable development of the balance sheet of the company. Consistent growth will cause the stock devaluation to disappear in due course and the share price will rise again in comparison to our initial purchase price. However, no one can predict when exactly this will happen. Therefore, we do not believe in stock market predictions.

Benchmarks are also less relevant in the short term using this approach. It is quite possible that our investments will only be picked up after a long time by the markets and will only provide added value from that moment.

In fact, initially we are contrarian investors. We buy shares (in our eyes „cheap“) when others do not want them and sell them (in our eyes „expensive“) when others consider them as a good investment. This sounds easy but the emotional tension should not be disregarded. Even for us, there is no certainty. Often it takes a while before the market corrects the undervalued price of a stock and prices only go up afterwards.

About 25 indicators help us to keep a disciplined and cool-headed approach.

We apply a geographical diversification as well as by sector to minimise the risk within the fund. In addition, each share may not exceed a certain percentage of the portfolio.

As we act as an investor of a company, we apply the „buy and hold“ strategy that allows us to keep costs low given fewer transactions within the fund.

Our management structure enables us to take quick and even non-consensual decisions if necessary; then the Lead Fund Manager has the final say. In volatile markets, this element represents an additional advantage within the value investing philosophy.

This context together with the relative small size of the fund gives us the possibility to react in a very opportunistic manner.