Our Process

As ‘bottom-up’ value investors, we look for stocks that are cheap based on our assessment of future earnings power, that use capital efficiently to support those earnings, and that enjoy the financial flexibility to cope with adversity. The pre-requisite for allocating capital in this way is a consistent approach to research which allows for comparable valuations.

The main source of ideas for the Fundamental Value strategies is our proprietary screen, which represents a quantitative articulation of our investment approach. The results are augmented by ideas from the analysts and portfolio managers.

Each sector screen is reviewed by the relevant sector team to identify the strongest candidates for due diligence. The team will engage with portfolio managers and analysts from other sectors to set priorities and allocate resources. 

We introduced third party data feeds/reports to highlight any material ESG issues when a stock is first reviewed. We work to understand their potential impact on the business model and our assessment of sustainable earnings power and the capital required to support those earnings. We also engage with both State Street Global Advisors’ Asset Stewardship Team and the company to drive improvement on identified ESG issues.

Historic financial data is restated consistent with our in-house accounting standards, and analysed within our standardised financial analysis template. We work to understand the reasons for a company’s success, its current challenges and the response of management. The objective is to determine what we think the long-term earnings power of the business should be, the capital intensity of that earnings stream, and if the financial resources are sufficient for us to conclude the business is sound. 

Our proprietary valuation models help us estimate the intrinsic value of the stock based on our research insights. Only then is it determined whether or not to recommend a stock as a candidate for client portfolios. 

The lead analyst’s peers subject the conclusions to rigorous review at regular team meetings. This forum allows the analysts solicit feedback on the investment case, allowing the knowledge and experience of the entire team to be leveraged. Only then do stocks become eligible investments for our funds.

Each strategy has a portfolio manager responsible for its performance. Their ‘buy discipline’ is to select the stocks from the list of eligible investments which have the most upside to fair value, in which they share the analyst’s conviction and which, together, allows for a well-balanced, diversified portfolio.

For our Global Ethical Value Strategy, a filter is applied to the Research Portfolio to eliminate stocks that contravene the ethical guidelines. From the ensuing opportunity set, the Global Ethical Value Strategy of 70–90 stocks is constructed.

We sell stocks when they reach our price target. Material changes in the price target are rare and tend to be very closely scrutinized. Analysts and portfolio managers are empowered to sell a stock from their respective portfolios if a better idea emerges, or indeed if they believe the fundamentals underpinning an investment case have changed.

Hire Date
Industry Start