Our principles in detail
Our strong conviction that equities are the superior asset class is backed by a clear investment philosophy implemented for all our funds. We value companies based on proven proprietary and holistic valuation models in order to determine the fair value of a company as accurately as possible. It is our aim to buy high-quality companies with solid balance sheets, stable business models, good profitability and successful management, at a discount to the calculated fair value. This means:
Fundamental economic analysis: in particular we aim to purchase undervalued shares, i.e. shares which in our opinion should be valued 1 Euro and trade at 70 Cents. Additionally we have to be convinced by the company’s business model.• Once we have identified and invested in a company with the described characteristics we allow time to do its job. In the long-run markets will adjust their assessment of the company to its true value.
• Research-based stock picking: the selection and investment ideas are generated by the research process that LOYS has established over the years.
• Genuine long-term vision: as a basic principle we remain invested for a longer period in companies that we find attractive. We do not intend to generate short-term gains through active trading.
• Focus on absolute gains: over time we place great importance on absolute and sustained structural improvement of the companies that we are invested in.
• One fundamental requirement for a positive investment decision by LOYS is the undervaluation of a company. Therefore LOYS does not choose investments based on the inclusion in an index, neither do we pursue fixed regional weightings. Only undervaluation guides our investment decision.
• However we aim to diversify our portfolio based on economic factors. This implies that we avoid only investing in companies of a single sector or industry.
• Buy and sell discipline: during his long standing experience in the selection and management of shares Dr. Bruns has developed distinct criteria for the right timing of buy and sell decisions. He acts in strict accordance with these criteria.
From these key principles, we have developed an investment process that helps us to align our actions strictly with these criteria.