Investment Philosophy

Concentrated investing driven by in-depth research and prudent risk management

bottom up fundamental research

Bottom Up, Fundamental research

Analysts build financial models and cash flow derived valuations on stocks in their coverage universe, which are then stress tested in peer reviews.

home 2 Concentrated, Best ideas, Long term focus

Concentrated portfolio, High Conviction investing

The funds hold between 15-20 stocks with an active share target of greater than 65%.

home 3 High conviction credentials

Long term Investment Horizon

Portfolio turnover is less than 20% since inception, highlighting the long term perspective.

home 6 ESG Focused

ESG Focused

Optar integrates ESG information into its financial analysis and decision-making.

We believe the market is myopic and has a tendency to value businesses on near-term earnings, allowing share prices to move away from their intrinsic value.

Our style is relative value with a quality overlay. We do extensive fundamental, bottom-up analysis, and are long-term focused.

We seek to invest in companies that can return above their WACC through the business cycle and are mispriced on our cash flow-based valuations.

Our quality overlay is to seek companies in attractive industry structures with strong return profiles, strong organic capital generation, sound management/boards, and conservative financial structures.

Our portfolios seek to own concentrated holdings of quality stocks that are undervalued versus their through-cycle economics.

Optar Capital’s process is fundamental and bottom-up.

We believe our investment insights stem from:

– Our rigorous valuation-driven process, combining detailed bottom-up analysis, continuous valuation ranking and detailed peer review.
– The long and proven experience of our investment team.
– Our time horizon (we focus on through-cycle earnings and the mis-estimation of earnings is generally beyond the short-term, where much of the equity market is focussed).

Our analysts maintain proprietary models on the companies in their investable universe. These models are influenced by a wide information set including company reports, the analyst’s experience, industry data, third party specialists (including broker analysts), and competitor filings. Regular company contact is also important in our research coverage. Contact engagements include site visits, investor tours, meetings with management (one-on-one or group), phone calls and investor days.

Optar Capital’s approach is that ESG analysis is best utilised to provide insights into risks and opportunities at the company level. As such stock analysts include ESG factors in their overall assessment of the company alongside traditional financial indicators when forecasting earnings, cashflows, growth rates and the overall sustainability of the business model.

ESG research includes a wide range of performance metrics, such as those that assess governance practices, health and safety programs, or involvement in controversial events/practices.

ESG information is obtained through company Annual Reports, Sustainability Reports, meetings with company management, sell-side broker research, and other external ESG research providers.

Analysts collect and maintain observable data which is then used for ranking a company’s performance relative to its peers. The data also allows for time series analysis to assess if the company is making progress on its ESG objectives.

Where Optar sees companies disclosing less than their peers, we seek to take a proactive approach to encouraging companies to disclose ESG data that is relevant, transparent and comparable.

In addition to collecting ESG data, the analyst is required to document how they have considered ESG factors including the issue of materiality in research reports which are then presented and discussed at the investment team’s research meeting.