Research based

Our investment philosophy defines us as a research based organisation.

We believe effective research starts with intuitive opinions on a potential opportunity. On this basis, we seek to generate multiple investment hypotheses around the circumstances creating a market anomaly. These hypotheses are tested through a rigorous, evidence based research process.

Our research process entails detailed analysis of historical company accounts, notes to the financial statements and all company disclosures. Upon this foundation we then undertake a heavy external communication process – with company management and industry participants such as suppliers, customers, government bodies and consultants.

Our objective is to genuinely understand the key drivers of a company within an industry, and more importantly understand whether the current market expectations for a company are properly priced by the securities market. Ultimately, we are looking to exploit mismatches between perception and reality.

Diversification

We genuinely believe in diversification. This does not mean that we mirror equity indices, but it does mean that we will hold a portfolio of securities with different characteristics and across different industry sectors. The fact is, proper diversification does not eliminate risk, but it can reduce short to medium term portfolio volatility, which from our experience is important to investors.

On top of this, diversification can also reduce the impact of investment management error. As we have found in our careers, it is not what you don’t know that hurts you, it is what you think you know for sure. Based on our philosophy and process, we always have conviction in our positions – but diversification exists to reduce the impact of misplaced conviction. We have been wrong in the past on our highest conviction views, and we will be again in the future.

Risk Control

Whilst diversification is an important component of risk control, over our careers we have learned that risk comes in many forms. At Newgate we utilise all modern quantitative forms of risk measurement and monitoring, but overlaying this is subjective judgement honed by the experience of a multitude of negative market environments.

Communication

Our investor partners receive a detailed monthly report on the Fund’s progress. We detail returns generated, and where they have come from. We give our researched views on the economic and market environment, and regularly drill down to write about key positions within the Fund.

Please contact us if you are a wholesale investor and would like to learn more about our investment strategies.