At the core of Agarwood Capital’s investment philosophy is our belief that sustainable alphas can be produced by generating original ideas, focusing on journalism-inspired due diligence and forensic analysis, conducting rigorous valuation work, developing clear investment theses and constantly testing them, and being keenly aware of the downside risks.
Our investment conviction is derived from our intimate knowledge of every company in the portfolio and by investing like a long-term business owner. We do not seek diversification in the conventional way. We know our limitations, i.e. We know we don’t have the ability to predict exchange rates, interest rates, commodity prices, or to time the markets. That’s why we don’t spend precious time on these things.We are aware that some of our investment theses might take time to play out, but we expect to be rewarded handsomely with multi-baggers when they perform.
Our investment process reflects our investment philosophy.
Idea generation: Ideas are generated by identifying long-term trends, seeking superior insights, using unconventional sources of information, and looking for contrarian ideas with asymmetric risk-return profiles. By relying on an acute sense of history and investment memory, we endeavor to identify and glean strategic insights from geopolitics, as well as social, economic, and industrial policies. These insights often help generate original investment ideas.
Company research: Besides fundamental analysis, our investment process is inspired by journalism and legal investigation methods. Our goal is to have validate our investment conviction to provide proof beyond a reasonable doubt.
Portfolio construction: Our portfolio managers construct alpha-diversified portfolios comprising stocks with structural, dynamic, economic, and opportunistic alphas. The portfolios of high- conviction stocks are diversified across more than 10 alpha clusters, where the correlations are low.
Risk management: We define risk as downside risk which can come from three major sources—deterioration of industry and company fundamentals, overvaluation, and debilitation of investment theses. We do not believe volatility or tracking error are true measures of investment risk. Nevertheless, we manage portfolios in strict compliance with client investment guidelines.
Investment Group Seminars
Value Investor Group in Washington DC – Meetings are both local and online meetings
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