Our philosophy and process
Our distinct investment philosophy and process for our UK, global and European equity strategies places sustainability at its heart
Potential, Valuation and Timing
Our PVT investment philosophy recognises the three key criteria that we believe enable us to discover the most promising investment opportunities regardless of market conditions.
We evaluate all stocks according to a combination of these clearly defined and continuously monitored investment factors. This enables our team to maximise returns and minimise risk.

Categories of potential
Over the years we have found that companies that can deliver above average potential divide into four categories; these relate to where a company is in its ‘life cycle’:
Growth – the delivery of strong revenue and profits growth
Quality – a business franchise that delivers a superior return on investment
Recovery – the process whereby a company produces a recovery in profits to ‘normal’ levels following decline
Asset-backed – the delivery of asset backed growth to a long-term investor.

Sustainability
Our investment philosophy is further enhanced by a fully integrated analysis of every company's sustainability credentials.
For further reading on our ESG integration in the PVT investment philosophy and process, click here.


We evaluate sustainability through the pillars of People, Innovation, and the Environment, looking beyond those companies typically rated leaders by third party ratings and thereby including improvers (companies undergoing change leading to positive long-term outcomes) and enablers (whose products contribute to driving sustainability improvements).
Not only is backing transitioning companies an important driver for a more sustainable future, we believe this is a significant source of alpha.
Our analysis determines a sustainability 'score' for each company we look at. These are broadly categorised as follows:
Sustainability investment in action
A selection of investment case studies demonstrating our sustainability analysis
"We are, first and foremost, bottom up stock pickers, but the PVT philosophy provides an unemotional analysis of an investment, detached from swings in markets and investor sentiment that can come from macroeconomic events and the news"
Hugh Sergeant, Head of Value and Recovery strategies

Investment process
We are practical investors who live and breathe the evaluation of company prospects. We also believe there are repeatable investment cycles that can be systematically exploited, so we combine quantitative research with fundamental stock-specific analysis.
Our proprietary quantitative analysis tool allows us to quickly and systematically review vast amounts of complex data efficiently, scrutinising a universe of UK and global equities in order that we can track down and target the best opportunities to investigate further.
We then use the knowledge, expertise and, importantly, experience of our team to carry out fundamental research to validate every PVT idea to find those that will work best in our portfolios.
Verification process
There are four stages to PVT idea verification:
Screening
Our quant tool's findings are discussed at our weekly team meetings. We’re looking for high scoring stocks. Once identified, one of the team is nominated to manage the verification process for that stock.
Validation
We test the PVT score and investment thesis through analysing the key drivers of PVT relevant to the type of company we’re looking at.
Company meetings
Company meetings are an integral part of our process but we don’t believe in having meetings simply because we can or to screen the market. Instead, we meet with companies when we need answers to specific questions such as the key drivers of return on capital and growth.
Debate
We believe that team debate is an important process in ensuring effective testing of the validity of a stock’s PVT investment case, its strengths and weaknesses.
In the weekly verification meetings, all new ideas are presented, debated and questioned before any investment is accepted into the portfolios.


The importance of an effective sell discipline
As well as identifying exciting opportunities that we want to buy, we also monitor every company already in our portfolios to know when the time is right to exit or sell a position.
We systematically monitor the PVT scores of all portfolio holdings in our quantitative analysis tool. When scores fall significantly, we re-verify the investment case and debate the investment’s position at the weekly meeting. A systematic sell discipline is critical. Our selling process is driven by the same PVT philosophy. Shares where potential is deteriorating, where valuations are less attractive following a period of outperformance, or where timing is no longer optimal will all be examined.
"The longevity and consistency of a stable investment process continues to reap benefits for us and our clients. It allows us to remain true to our investment beliefs and insulated from the distraction of day to day market movements. By combining quantitative analysis with the knowledge and experience of our fund management team we ensure that our focus is always exactly where it needs to be – on finding great investment opportunities."
Charles Benett, Head of PVT Equities
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