Fundamental Credit Strategy: Investment Approach
We are classic value investors focused on credit markets. We rely exclusively on our own research. We identify companies that have demonstrated the ability to perform well regardless of industry conditions, cyclical trends, or volatility in the economy or market. We favour financially transparent, simple and predictable companies run by proven management teams whose debt sell at attractive valuations due to any short-term dislocation, which could be due to market, economic, geographic or industry specific conditions.
We run concentrated, conviction-weighted portfolios, which allow our very best ideas to drive performance. We define risk as a permanent loss of capital. Therefore, it is imperative to buy these credit securities with a significant margin of safety to minimize this risk. After we make our investments, we patiently wait for them to reach fair value. By concentrating on not losing money, the probability of generating out-performance increases. Over time our investment strategy has generated market topping returns relative to our competition or any benchmark.
We are not a marketing focused asset gatherer, rather we are a performance focused investment manager. We prefer referrals from our existing investors or reverse enquires from capital allocators who find us via their own research - the pull of interest over the push of sales.
We are active. We can add real value by being contrarian and not replicating other funds or any index
We are bond pickers. We like businesses and management that have respect for debt capital providers as much as they have for equity capital providers; that have the ability to earn an attractive and sustainable return on capital over the business cycle. We usually avoid companies which have activist or private equity investors on the equity capital structure
We are high conviction. We concentrate capital and research on our highest conviction investment ideas in a limited number of companies/sectors
We are consistent. We adhere to a well defined and time-tested investment approach without style drift
We are long term. We aim for a three to five year holding period, allowing the company's fundamentals to overcome the short-term fears of the credit markets
We are low correlation, return enhancers. We have low correlation with most bond and equity indices & ETFs (less than 0.5)
This is a discretionary strategy.