Flow markets, dominated by international investors
Inconsistent access to bank liquidity for companies
The importance of (geo) political factors
A trend depreciation of currencies with for some of the crisis phases
On the other hand,
We know the companies perfectly and follow them closely over time, and have price objectives and respect them (DCF is a centerpiece of our analysis)
1234 hk - XYZ Industries Ltd: DCF Valuation
|Fair Value of Equity||8 495||Terminal Value is: 58% of firm value|
|Fair Value of Equity (Steady State)||9 254|
|Fair Value of Equity (Alternate)||11 085||Dec-21
|No. of Shares Outstanding||1 828|
|Fair Value per Share||4,6||5,9||6,3|
|Fair Value per Share (steady State)||5,1||6,4||6,9|
|Fair Value per Share (Alternate)||6,1||7,7||8,3|
|P/E at Target||4||23|
Patience, conviction and method, to invest in leaders. In this way, we avoid panic movements (bearish or bullish).
Portfolio construction is ‘’bottom-up‘’ but Siddhartha-AM benefits from country analysis methods to avoid high-risk markets.
These are based upon macroeconomic, monetary policy, and governance criteria.
Siddhartha Asset Management Country Evaluation
|Current account||External debt||Fiscal deficit||Public debt||Inflation / Mon. Pol.||Governance|
This type of analysis can't avoid global crises, but in that case, "high risk" countries are generaly avoided.
The generation of Free Cashflow
High Return on Net Operating Capital (RONOC)
A large potential market, therefore essentially large caps
A leading (or close) position in its segment
Have sustainable competitive advantages and business has strong entry barriers
Companies with a high need for capital
Niche players and small caps
Cyclicals, comos, companies that have little control over their main parameters
Regulated sectors (electricity, concessions, etc.)
Good governance goes without saying; it is in fact a criterion for financial investment.
The issue of human rights is vital, as is that of the environment.
Apart from weapons, no limitation to other sectors (tobacco, alcohol, etc.).
ESG ratings based on formal policies established by the company.
The CO2 emissions of companies in the universe.
Principle of exclusion of companies in the armament sector. Siddhartha-AM refers to the SANSO IS exclusion policy.