Asset Value Investors (“AVI”) value investment process for British Empire emphasizes bottom up fundamental research, using both quantitative and qualitative techniques.
Screening of the Universe
AVI’s screening process starts by looking at an investment universe which consists of global holding companies, closed-end funds and asset backed companies. We have detailed models on approximately 400 companies out of this universe, which track stock prices and earnings information.
Throughout the filtering process AVI asks the following questions:
- Is the stock trading at the wider end of its discount range
- Are we comfortable with the NAV
- Do we like the valuations
- Do we want to own the underlying businesses
- Does the business have a strong balance sheet
- Is the company headed by an honest, intelligent management team with a good track record and willing to engage with shareholders
- Can we see a catalyst to bring the share price back to its true value
- Is the political and economic environment amenable
AVI’s analysts track stock prices, earnings and balance sheet information with an aim to identify good quality companies trading on a discount to their NAV which exhibit clear trends to create long-term value.
- In-depth analysis of company annual reports and filings
- Consulting with industry contacts and brokers
- Bottom-up analysis of a company’s fundamentals, management and industry trends
- Specific focus on identifying the catalyst which will reduce the discount and unlock value
- Regular meetings with top level management
The objective of AVI’s portfolio construction process is to end up with a concentrated portfolio of about 50-60 holdings, facilitating a clear monitoring process of the entire portfolio. AVI picks stocks that meet our investment criteria and once we decide to invest we seek a minimum position size of approximately 2% of the portfolio, however the timing of the catalyst and the liquidity of the stock can result in the holding being greater or lesser than 2%.