Summary
My approach is to cover companies that fit my investment criteria and trade at prices with near term free cashflow yields that provide above-average returns. Usually my hurdle yield is 10%. This way I do not need the market to converge to my assessment of value to earn acceptable returns. You can find my investment criteria on my website.
Since good companies rarely come cheap, I predominantly look off the beaten paths at smaller companies in sectors or regions that face short-term headwinds and are therefore neglected by most investors.
Most of the times, I use a Discounted Cashflow Model (DCF) to value businesses. However, to limit the possibilities to mess with the model, I developed a variation of the DCF that uses less parameters at the cost of being less precise. I think the tradeoff is very worthwhile as I really take the words of a Sir Maynard Keynes to heart: It is better to be roughly right than precisely wrong.
Lastly, to protect me from my own ignorance and stupidity, I always insist on a margin of safety.
Areas of Expertise
Primary Asset Class:
Equities
Geography:
Europe Middle East and Africa
Countries:
(generalist)
Sectors:
(generalist)
Content Verticals:
Equity Bottom-Up, Thematic (Sector/Industry)