Investment Philosophy
We believe the most effective way to deliver attractive returns In Emerging Markets is to invest with flexibility and unconstrained by country, sector or market cap. We focus on identifying cash-flow generating companies that are not over-burdened by debt and we apply a disciplined value philosophy to invest in those with the most attractive valuations.
We are unequivocally value investors. Value investing to us means investing in companies that trade below our estimate of their intrinsic value
We benchmark potential investments against the relevant local cost of capital. This can vary widely across different countries but is not always recognised by equity markets. Over time, such inefficiencies can create significant value opportunities. We use a proprietary system to estimate the cost of equity for all stocks within our universe. This anchors all our analysis and feeds into stock specific models.
We devote the majority of our time to meeting company management and learning about the businesses they run and invest in. This allows the team to look beyond the headline numbers and anticipate new trends and their impact on the business.
Over longer time periods, Emerging Markets should offer superior growth to Developed Markets, almost by definition. However, in order to fully capture its benefits, careful stock selection is paramount. Emerging Markets tend to be less efficient than Developed Markets which means risks can be higher, however, we believe that active selection has more opportunity to add value. We believe that the 50+ years cumulative Emerging Market investment experience of the North of South team gives our investors an edge in doing so.