Defining Value and Risk
The manner in which we perceive value and risk sets us apart from other investment managers and has a direct impact on the way we construct a portfolio, especially when it relates to our cash position and benchmarks.
We will put cash to work only when we are convinced that the long-term investment case is a better alternative to the cash position. We believe this provides better flexibility in a broad market sell-off, as well as full discretion on how and when we invest. Most importantly, cash provides the ability to take advantage of opportunities created by indiscriminate selling in the market.
Benchmarks have no influence on portfolio construction. We seek good companies in Europe that are significantly undervalued to our intrinsic value and possess a risk profile with which we are comfortable. Our portfolios can look quite different from the market index because we are not constrained by country, sector, or tracking error limits.
Our investment horizon for each company is typically four to five years. We believe this is generally the time for the stock market to close the valuation gap between the price we paid and what we believe the the company is actually worth. |
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