Investment Philosophy

The equity market is a complex adaptive system¹ from which prices are determined by the collective emotional interpretation of information by investors 

• In the short-term participants discount fundamental information with either excessive euphoria [greed and leverage] or undue desperation [fear and deleverage]  
• Only in the long-run [on average] do they properly discount underlying business fundamentals and thereby achieve a state of equilibrium [price = value] 

We take a very rational, theoretically sound and disciplined approach to interpret information, its impact on fundamental value, and the risks associated with this value

We generate excess returns for our clients by   

• Using better quality, and more proprietary sources of information [quality + scarcity = return]  
• More effectively processing information into efficient portfolios [focus + reliability = return]

 

¹Complex adaptive sytems are described as being in a state of self-organised criticality. "Self-organised" means that there is no leader. The system arises from the interaction of many underlying individuals. "Criticality" suggests nonlinearity. More specifically, the magnitude of a perturbation within the system (cause) is not always proportionate to its effect. Small perturbations can lead to large outcomes, and vice versa.

 

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