Investment information

Our monthly newsletter discusses global and domestic issues with a focus on events effecting financial markets and the ways in which we expect them to develop. We also consider the risk context and its influence on our investment views.

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Philosophy and process

Investment Philosophy

Our mission is to preserve the capital entrusted to us and deliver superior risk adjusted investment returns for our clients.   Our investment philosophy is based on the firm belief that long term investment returns depend on two key investment characteristics:

- the stable compounding ability of the underlying cash stream; and

- the price the investor pays.

We believe that only fundamental research aimed at establishing the true intrinsic value of the investment opportunities can provide true insight. Therefore we focus on identifying the intrinsic value of an investment opportunity and then ensuring we invest only when there is an appropriate margin of safety. This margin of safety allows us to absorb short term market shifts, strengthens our ability to take a longer term investment view and allows portfolios to benefit from the power of compounding returns.

Our philosophy has been adopted and carried forward since the inception of the company. It has been a core principle of the firm and its investment professionals. The investment process has been refined and improved over the years, but the core investment approach and philosophy has been unwavering.

Investment Process

Our investment process is based on a bottom up approach aimed at identifying quality investment opportunities that offer attractive future returns at an attractive discount to our view of their future value.

The process starts with the identification of the appropriate allocation to a range of asset classes to achieve the appropriate tactical asset allocation of the portfolio. Multiple asset classes are considered to diversify and enhance risk and reward.  We seek an optimal balance between preserving the capital entrusted to us and growing it.

Each asset class is then populated with securities that have been analysed, valued and selected to create the optimum houseview portfolio that reflects our Long Term Capital Growth Strategy (LTCG).  This houseview portfolio is constructed by our asset allocation committee to provide balance and diversification while at the same time reflecting conviction in our best investment ideas.  The houseview portfolio represents our optimum base case investment strategy from which all mandates are structured. Each portfolio manager implements the houseview in their individual portfolios taking into account any investment guidelines that may apply to the specific mandate.

Our investment process enables us to build high conviction portfolios.  This leads to concentrated portfolios with active positions in securities we believe, are trading at attractive valuations and have attractive long term prospects.

 

Investment considerations

Our research and analysis is thorough. Portfolio managers consider various aspects before making their investment selection.

Superior businesses

Melville Douglas aims to identify businesses with sustainable competitive advantages:

  • Strong franchises, proprietary or superior products and services and a distinct competitive advantage
  • Superior distribution systems that provide the best customer service
  • Market leaders with pricing power
  • Registered trademarks, trade names and patents which provide competitive advantages
  • Sound management strategies which have produced consistent historic earnings growth
  • Businesses which are predictable and stable, and which undergo gradual rather than rapid change and
  • Businesses which have moderate gearing and significant cash flows.

Management

Management of these businesses is assessed for certain key competencies:

  • Integrity - by instilling high standards of corporate governance, conservative accounting practices, maintaining tight financial controls and exercising cost constraints
  • Strategic excellence - there should be clear, focused strategic thinking combined with consistent execution and transparent hurdle rates
  • Ownership - management which is incentivised by owning shares in the business
  • Shareholder focus - a commitment to generate strong cash returns and to deploying the cash to maximise the benefit to share holders
  • Before investing in any company, we thoroughly research it. Our portfolio managers visit the company and ongoing contact is maintained.

You have reviewed the latest product information on our website (fact sheet) and know the risk and fees associated with your investment choice. You have read and understood the terms and conditions available on our website or upon request.

To invest directly, investors need to download the application form, complete and submit this form and all the associated documents to STANLIB:

E-mail: instructions@stanlib.com

Facsimile: 0867 277 501 or 011 448 6666

STANLIB Collective Investments Limited administer these funds.

You have reviewed the latest product information on our website (fact sheet) and know the risk and fees associated with your investment choice. You have read and understood the terms and conditions available on our website or upon request.

To invest directly, investors need to download the application form, complete and submit this form and all the associated documents to STANLIB:

E-mail: instructions@stanlib.com

Facsimile: 0867 277 501 or 011 448 6651

STANLIB Collective Investments Limited administer these funds.

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