Thoughts on our portfolio structure

macro thoughts and valuation effect ASSET ALLOCATION

These two factors also affect SECURITY SELECTION

But the latter is also affected by

MARKET STRUCTURE OF THE INDUSTRY INVOLVED (this includes the affect of technology)
MANAGEMENT
CAPITAL ALLOCATION
THE BUSINESS MODEL
CAPITAL STRUCTURE
REGULATION
TECHNOLOGY

We place emphasis on

insurance strategies

how the cost and value of money will evolve (which value of money environment, stable, deflation, inflation and the spread between the change in cost and value of money)

how currencies are priced relative to each other

the illiquid premium (as we are LT investors). However we want to focus on companies close to us so have more info then a company in Vietnam that seems to be trading at less than working capital

Deep value stocks that are less dependent on how macro issues evolve

High quality companies

Why we divide portfolio construction into three

We divide portfolio construction into three themes. This way it is easier to notice patterns by classifying the information we are bombarded with. (This is the success of science. Seek data and classify, keep checking if predictions from the data are correct, if not, rule out the theory)

We therefore focus research in discovering sustainable trends and patterns that are repeated throughout history, in different markets in similar conditions in different times or not.

This may be for the macro economy of different countries, or different sectors in different countries or in the same country or different companies in the same/different sector or country.

For example, we would like to classify market structures into a handful of options, and understand what drivers have lead them to that market structure and what we would need to see to believe a change can occur in that structure and explore who would gain the most.

Learn from data in the past and in real time. Focusing on particular business areas.