High conviction, benchmark independent equity strategies
We offer our clients a selection of Australian and global equity strategies designed to meet a range of investment objectives. Our core funds feature an active, high conviction investment approach, based on disciplined stock selection through rigorous fundamental bottom-up analysis.
Large companies dominate the ASX200
As companies get smaller, analyst interest declines and volatility rises
Source: Ellerston Capital
Our investment philosophy is built on the belief that sharemarkets around the world are not always efficient, giving rise to mispricing across both individual stocks and entire industries. Investors often over-react to short term trends while under-appreciating the impact of longer term structural changes. They group sound companies together with poor companies, instead of undertaking the difficult task of in-depth rigorous analysis, missing valuable opportunities in neglected sectors.
In Australia, these inefficiencies are heightened by a local fund management industry that is much more concentrated compared to other developed markets. Local sharemarket indices are dominated by a few large stocks and sectors — and smaller companies attract less analyst attention and higher levels of share price volatility. That creates opportunities for active managers to identify mispriced stocks and benefit from sizeable share price movements. Especially if they have the expertise to look beyond the top 20 and accurately analyse the true value of mid and small cap stocks.
Seeking Outstanding Growth Potential
We take an active, fundamental bottom-up approach to stock selection, to identify mispriced stocks and take advantage of the opportunities they create. By thinking differently and going against the herd, we seek to avoid the market’s frequent bouts of irrational exuberance and sudden panic — and turn them to your advantage.
We favour businesses with a strong balance sheet, high quality management and a clear strategy. We look for companies we believe can either sustain their current high returns or generate a higher return on capital in the future, and whose fundamental value is significantly higher than their current market price.
We also look beyond the spotlight of the large cap companies and securities that attract the highest levels of analyst and investor attention. Because of our benchmark independent approach, we drive our investment decisions, not the benchmark.