An investment strategy built to last

Whilst many asset management firms rely on the talent of one portfolio manager, we rely on a strategy and a process. This process has been developed and implemented by a team with near 50 years of cumulative experience in business and investing. Our European Compounders fund, which we have been managing since its inception on June 13, 2005, has one of the top track records in its category over a complete investment cycle.

Overview

We are long term shareholders with a business owner mindset. Only companies that have global operations interest us. We look for high quality business models that are in some way misunderstood and thus mispriced. Because this combination is rare, we have very concentrated portfolios, that are thus very different from traditional indexes.  As a result, we use only our own qualitative fieldwork to determine opportunities. This research is partially influenced by 'conscious capitalism'.

We are long-term shareholders with a business owner mindset

The shorter your horizon, the bigger impact emotion and randomness has on your results. We want our outcomes to be driven by our analysis as much as possible. As a result, we take a long-term view, where fundamentals play a bigger role. Over time, stock prices tend to reflect intrinsic value - determined by the underlying business. Taking this into account, we don't think of ourselves as financiers or allocators, but as owners and entrepreneurs that employ a private business mindset to public market opportunities. We don't look to 'trade' in and out of securities. We want to participate in the success of our businesses, preferably over a period of at least 5 years. Time is one of the biggest drivers of compounding.


That invest only in companies that have global operations

We don't want to be limited by a given region. The world is evolving, with more than 90% of the global population being outside of Europe. We want to benefit from global growth and innovation, and it's thus very important that our businesses have exposure to multiple regions and markets. This also reduces country and region specific economic and political risk.

With high quality
business models

Good businesses tend to create and grow shareholder value at a higher than average rate over the long term. To do so, they must generate strong long term cash flow. This is achieved when they can reinvest earnings profitably over long periods of time. We refer to these companies, that generate more cash from reinvested cash, as "compounders". We spend most of our time looking for them.


That are misunderstood
and thus mispriced

If things are fully reflected in the price, ie they are well understood and expected by investors, then even if they materialize, the share price won't perform better than average. If it's 'obvious' to everyone, it's not useful to us as investors. We look for situations that are 'non-obvious', with a discrepancy between short term investor perception and long term reality. Prices fluctuate more than value over the short term, and this offers an opportunity to occasionally buy something for less than it's truly worth, and thus to benefit when it eventually trades for what it’s worth (or it's worth increases over time).


Held in concentrated portfolios

Because good businesses are rare, and mispricings are especially rare, there are a limited number of investments that meet our criteria. In part as a result, we have very concentrated portfolios of 15 to 20 holdings. This allows us to put a great deal of research into each investment. In addition, we believe in investing heavily when we find particularly attractive opportunities. We do not equal weight, and thus our top 10 holdings represent over 60% of our portfolios. Our clients understand that our portfolios will not always move in line with the market over the short term. This is the result of being different, which is necessary to achieve long term outperformance. Success is rarely linear.

Based on our own 'on the ground' research

If we're going to have a limited number of investments, we need to understand them intimately. We cannot entrust this process to anyone outside of our team. More importantly, we cannot expect to really know our businesses by sitting in an office in front of a computer. Our approach is closer to journalist 'field work' than academic research. We therefore spend a large portion of our time 'on the ground', speaking to people including ex and current employees, suppliers, customers and industry participants along the value chain. This due diligence often takes multiple quarters, if not years. This is the only way we think we can get a differentiated view and develop real insight.


We are capitalists,
but conscious capitalists

Our view is that the goal of any company is to create value for shareholders. Companies have a higher chance of creating value if employees, customers, suppliers and the government are content. These are the main components of SRI, and it is thus simply 'good business' to pay attention to them.
 

SRI Policy

About

The roots of Focus AM lie as much in the investment field as they do in operating businesses
About

Team

A diverse group that has worked together long enough
to build lasting trust
Team

Funds

A single approach, a single team, two different vehicles
 
Funds
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