Our aim is to maximise long term wealth for our clients by purchasing companies trading at the largest discount to their long term intrinsic value.
We combine this with a macro-economic view to protect clients wealth before recessionary periods, and ideally purchase these same strong companies near or at the bottom of recessionary downturn periods, when prices are low to generate higher returns and greater wealth for clients.
In some portfolios, we look to generate wealth during these recessionary periods. We believe that clients should not have to experience panic, fear, and financial loss during recession downturns, as this is easily avoidable.
Our risk-averse investment philosophy is to calculate both the present intrinsic value of a company and the long term intrinsic value of a company and to invest in companies with the largest discount. We take a 5-10 year view and continually research companies for the largest discount as this is how we believe we will maximise profits.
When constructing portfolios, we combine bottom up investing, which focuses on company aspects, with top down investing, which focuses on the macro-environment, as the combination ultimately affects share prices and will generate higher returns for clients.
In determining intrinsic value we focus our research on many factors including sector fundamentals, strength and weaknesses of company fundamentals, as well as risk factors surrounding these companies.
We believe by being risk-averse and investing in strong companies with low risk factors, we will yield superior returns in the long term.
We believe that in the short term the stock market reacts to many aspects including sentiments such as fear and greed, to which people such as technical and short term traders react. However, in the long term, share prices will return to true intrinsic value.
As sentiment dominates the stock market in the short term, there are times when the share price of a company, with a weak intrinsic value, may outperform a company with a strong intrinsic value. When this occurs, we would rather under-perform as we feel those shares are higher than their intrinsic value and when this occurs there is a very high risk of capital loss and we are not prepared to take that risk as the short term reward is not worth the long term capital loss.
When share prices normalise, the share price of the company with a weak intrinsic value will lose value and the company with a strong intrinsic value will outperform.
In summary, a combination of protecting clients wealth before recessionary periods and purchasing strong or strengthening businesses, at low prices, especially during market downturns and recessionary periods, will generate safe, superior returns and ultimately superior wealth for our clients.
We use the, Environmental, Social and Governance (E.S.G.) principles when considering our portfolio construction.
We are true believers in “sustainable investing.” where our investments seek positive returns and long-term impact on society, environment and the performance of business.
The purpose of integrating E.S.G factors into our investment process is to improve the analysis of all investments, promote improving standards of practice, and assist the investment process to mitigate any E.S.G risks to potential or existing investments.
The application of ESG analysis and screening is defined by our clients’ expressed preferences. At all times our fund’s asset allocation or investment strategy must prevail to ensure that risk-adjusted returns are achieved. Principles of sound portfolio management should not be compromised in the RI or ESG screening process.
Ubuntu Wealth endorses the Code for Responsible Investment in South Africa (CRISA).