Most of the fund managers state that they manage based on fundamental analysis and that they are value investors, in actual fact, very few are. Keeping the companies models on a spreadsheet does not make you a fundamental investor. Many of them are then ready to buy or sell on a whim, based on rumours or, more frequently, the direction of the market. Most of them are closely alined to the benchmark of the products they manage. We are truly active and value investors who base their work on fundamental analysis. We spot the deeply undervalued companies and we utilise these situations. We are medium term arbitrageurs. We do not expect to pick the next Amazon as we find it so difficult to handle the many variables that can decide the future of the growth of a company, including luck. However, we do know accounting and we are passionate in finding unrecognised value in franchises, inventories, brands, materials and immaterial assets.
We are deep value and contrarian, an endangered species. We have a knack for spotting neglected niches around the world. We try to anticipate trends when their cost/benefit profile is alluring. We have the courage to be different. And we are clear about our approach. In order to reap the benefits of this approach we need to share it with our clients, to communicate consistently, to explain the way we see and appraise any company, to show the silver lining that we anticipate. We consider the capital market as an opportunity to invest in the real economy, in companies more than in stocks. And we proudly champion the worth of accounting over headlines.
At Niche, we have a truly global vision. Having managed, both global products and specific products in Europe, the USA, Asia-Pacific and emerging markets for 15 years, with outstanding results, demonstrates that Niche managers are able to not only keep a grip on what is going on in a world that is more and more globalised and interconnected but it is also able to find opportunities across the continents.
The capital market is based on short-termism, as a consequence momentum investment prevails. There is logic in this. Fund managers are valued and paid for the performance they make each year, if not semi-annually. Therefore, fund managers can easily lose their assets under management and the benefits that go with them. Many clients choose to bring new money or withdraw old money based on the previous year results. Risk managers use the same models that push to reduce the risk when the market is attractive and increase it when the market is expensive and overcrowded. Media-outlets magnify the news, making investors more emotional. The globalisation of the financial markets increases the number of players and the liquidity, which amplifies this phenomenon. The end result is that the opportunities for contrarian investors with a disciplined fundamental approach increase. The ones able to thoroughly research the companies in their portfolio, are also able to dig in their heels without being a victim of the short term market behaviour and instead profiting from this. However, the manager and the clients have to be patient, opportunistic and allow the investment cases time to play out.
