We believe that over the long term, fundamental factors drive share prices and that these factors are best analysed within an industry framework. Within this framework, we seek to identify companies whose share prices do not fully reflect either their position as industry winners, or their potential to become significantly stronger players within their field of operation.
In the majority of cases we believe that good companies deliver superior investment performance over the longer term. However, there are also significant opportunities to make money by investing in companies which are the subject of advantageous external dynamics. These dynamics might stem from developments in the economy, society, innovation, from within the industry itself or from the way which investors value companies.
Thus the identification of “best in industry” characteristics, together with an assessment of the catalysts which are re-shaping the competitive landscape, assist us in picking stocks with growth potential. A comparison of valuation metrics across the peer group allows us to highlight situations where this potential is not fully recognised by investors.
At Peterhouse Asset Management we prefer to think of our approach as a technique not a process. This means we are constantly looking to refine it, hone it and improve it to provide in much the same way as a successful business, orchestra or any team across other fields does. This means constantly challenging ourselves, our views and our analysis to minimise mistakes and give ourselves the highest chance of success.
Ideas are discussed in an informal collegiate environment, with managers doubling up as analysts to ensure a thorough and properly thought out assessment of an industry and business and prospects.
Our individuals have built an expertise in many investment fields and a management style that encourages their views to be expressed and debated in a productive way. We aim to place the key criteria of seeking out successful companies in the context of the market’s constantly changing dynamics.
At its heart we believe each investment decision is driven by a simple concept– to buy an asset that is undervalued relative to its peers and its prospects. Understanding why the asset is relatively cheap requires a disciplined fundamental approach to investing, while understanding investment dynamics, volatility and risk enables an insight into how that asset price will move to close the undervaluation. We aim to find businesses whose characteristics identify them as undervalued relative to peers and prospects with catalysts that will initiate a revaluation.
Below is an insight into the various investment techniques used in each of our funds:
Strategic asset allocation ensures Peterhouse’s managers implement long term views on the relative merits of various asset types. By blending the range of asset types in portfolio construction, Peterhouse’s managers aim to meet the Fund’s risk profile whilst looking to optimise return. Allied to this Peterhouse’s funds employ active tactical asset allocation which enable our managers to make short term changes to the strategic asset allocation with the aim of enhancing potential returns.
Our fundamental analysis seeks to understand a business and its drivers. We assess these dynamics in the context of the market environment and identify catalysts that will initiate a revaluation. For our equity portfolios, Peterhouse’s investment managers pick stocks on an unconstrained basis within the mandate and aims of a fund. Typically, focused portfolios of 40-60 holdings are managed with a view to achieving premium return for investors. Peterhouse’s specialist equity mandates are run on a Global Equity basis.
Our fundamental analysis seeks to understand gold companies’ drivers and place them in a macro-economic context. The Fund’s objective is to provide long-term capital growth from a globally diversified portfolio investing primarily in small to medium capitalization companies in the gold and precious metals mining sector. It will do so by utilising the considerable specialist experience of the Peterhouse investment team in this sector to identify “best in industry” management teams and assets, together with catalysts which are re-shaping the mining and gold sectors.
Our fundamental analysis seeks to understand a business, its drivers and cash flows. We model these micro dynamics in the context of an issuer’s/specific issuance’s relative value versus its own capital structure and that of its peers, and identify catalysts that we believe will initiate an absolute or relative revaluation of the business. Peterhouse’s current fixed income mandates include both short and longer-dated Investment Grade portfolios.