As we have touched on previously, we are in the development process of new fundamental investment research to advance global fundamental equity investment.
As our stance remains rooted in the fundamental long-term investing, we believe that the efficient and seamless link between the discovery stage in the investment process and the in-depth research process is the key. Why do we think so?
First, the second stage of fundamental analysis takes more time. It requires a mix of detailed financial analysis and company/industry research to find and set the critical investment thesis with a conviction for the security. Although no investors are taking the same approach and the exact meanings of the conviction are not uniform, the process to come to the level of confidence that can pass the threshold as an investment approval needs to be structured and managed carefully.
Second, it is also crucial for an investment team to conduct the review in a fair and neutral way to determine and agree on the risk profile and risk-adjusted return on cash flow. If starting from a set of the candidates that are not optimized and roughly defined, the analyst turned out to have low pass rate and the contribution of research to the investment portfolio would become limited. The investment organization’s self-improving ability is, in a sense, a result of both the integration as well as the articulation of each step of the front-end process.
Third, if you are a manager who is getting lots of ideas from analysts, it is advantageous to have tools to sort the ideas consistently. Biases in the market are the opportunity for a manager to exploit to gain returns. It is hard to stress enough to keep a distance from the market in any weather of investment results to achieve access in the long run. Just believing and sticking to do so is not the best action, as people can only trust in what he or she finds and understands with convincing observations and evidence. If the discovery process is not carefully designed and selected, the examination process of such investment candidates will force the manager to get leaning toward the market-oriented and opportunistic approaches. So the integrated totality matters in driving the right investment strategy and team forward.
Anyway, we wish to share with you more in the future. So please stay tuned: “Intelligent Global Fundamental Investment Ideas Discovery.”