There are three criteria for investment:
- companies must display quality credentials that allow them to generate sustainably high returns on capital employed. Reinvesting at high returns drives economic value and share price performance;
- companies must clearly demonstrate how ESG considerations are embedded in their business strategy. Every company faces material ESG risks that can have a direct impact on long-term share price performance; and
- there must be an investment case. A quality company that embeds ESG is only a good investment where a valuation opportunity exists
We believe that the market is short-term focused and often misprices the compounding nature of quality companies. We take advantage of this through our long-term investment horizon of 3-5+ years. We run high conviction portfolios of 30-50 companies, where each position has a meaningful impact, without a tail of insignificant holdings.
We screen the investible universe on quality metrics and then undertake rigorous bottom-up research. Our team-based approach ensures that every investment is thoroughly challenged, while our ESG research is independently validated by an external consultant.
We have been successfully investing in European small-caps for twenty years, and running our Sustainable European Small-cap Strategy for fifteen.