Investment Philosophy

Investment Philosophy

Value Based Investment Philosophy

Auscap is a value based equities manager. The Fund targets attractive total return opportunities through disciplined, patient investing. Auscap aims to preserve capital and generate long term, compounding returns.

Our value based investment approach focuses on long investments in high quality companies that have a sustainable comparative advantage and are trading at prices significantly below their long term intrinsic value. Short positions are held in companies that display the opposite characteristics. Our analysis includes consideration of Return on Equity (ROE); Return on Invested Capital (ROIC); capital structure; the strength and discipline of company management; product or service characteristics such as price, product, cost of production and market positioning; and measures of value, such as price, earnings, yield and future growth.

Auscap will seek to achieve investment returns by investing the Fund’s capital in securities it believes will appreciate in value, whilst shorting securities it considers will depreciate in value.

The typical asset classes invested in are listed Australian equities denominated in Australian dollars and cash. From time to time, the Fund may invest in other asset classes.

Generating these returns is dependent on a number of assumptions, including sufficient attractive investment opportunities, the market’s recognition of the value of these opportunities in line with Auscap’s expectations and the ability of Auscap to limit the number and impact of errors in analysis, assessment and execution of its investment strategy. Auscap will allocate capital in accordance with expected performance and risk measures. Short selling will be used to expand the range of available investment opportunities and achieve returns when the value of a security is expected to fall.

Our Portfolio

The Fund is a high conviction portfolio that is typically invested in 25–45 positions. The Fund is long biased, however may be net long, short or neutral depending on the strategies being employed by Auscap at the relevant time.

The Fund may hold cash so that it is in a position to take advantage of market volatility and compelling investment opportunities as and when they arise.