Investment Philosophy
Stock picking is in Moneta’s DNA
Stock picking is about selecting stocks based on their own merits and not because of their membership of a sector or a stock market index.
Our investment process is rigorous and based on in-depth and autonomous financial research. This enables us to think independently, remain realistic and have varied investment ideas adapted to differing market conditions.
Our range of equity funds is deliberately narrow, and all our funds have a single objective: performance.
We are equity markets specialists, and this is where we focus.
Our approach is based on fundamental analysis and is divided into 3 steps:
1. Understanding through financial analysis
We seek to understand the companies in which we invest: discover the particularities of their businesses, the barriers to entry, what is at the origin of their success or their difficulties, their strategy, their management.
We systematically assess a company’s senior management based on qualitative and quantitative criteria. We look at their motivation, skills and track-record to ensure that the company is managed to create value for all its shareholders, and therefore for us as investors.
The objective of this analysis is to identify the risks and opportunities of each potential investment.
2. USING OUR JUDGEMENT IN THE VALUATION PROCESS
We draw conclusions from the analysis phase to value a company. This work includes forecasting its financial results and analysing its current and future financial structure.
The attention we give to valuation is indeed an essential characteristic of our portfolio management.
Our valuations also take consider account non-financial criteria such as the quality of corporate governance.
Our conclusions are the result of our independent research.
3. Act according to our convictions
After having explored each case in detail, we translate the two previous steps into investment decisions.
We buy companies that we consider undervalued regardless of current investment fads and we sell overvalued companies even if their short-term future looks clear. In short, we structure portfolios according to the convictions resulting from our work.
Once invested, we remain vigilant and proactively follow-up on all our investments: frequent contact with management teams, field visits and regular reviews of our investment theses are part of our daily life.
Discipline, both in buying and selling, is essential to our process. Portfolio management requires constant focus and our collegial approach enables us to meet this requirement.
A specific feature: stock picking applied to long short management
Long / short management makes it possible to associate long positions with short positions within the same portfolio. A long position wins when the share price rises; conversely, a short position wins when the share price falls. In concrete terms, this involves buying stocks in companies that we believe are undervalued while selling others that we believe are too expensive.
Moneta Long Short aims to differentiate itself in terms of risk/return since it is positioned between long only equity funds and diversified funds. It provides partial market exposure with less volatility and significantly reduces the downside risk compared to a long-only equity fund.
"While a traditional manager will be forced to exclude companies deemed too expensive from his investment universe, we can sell them and try to take advantage of a downturn. This strategy multiplies the possibilities of generating performance."