Sustainable lasts longer, both for our world and for our capital. We are aware of the vulnerability of planet earth and the role that companies must play to keep it livable. That is why we assess all of our investments internally and externally on Environmental, Social and Governance (“ESG”) factors. We do this in a clear manner and based on evidence based data as much as possible. However, there is one more important step to take beforehand, because these are the questions we ask at the basis of our decision to invest in a company:
1. What does the company do? Does their service or product play a role in achieving a more sustainable world? Does it help us as humanity forward by offering smart solutions?
As a fund manager, we answer these questions with a qualitative assessment of the company. This is reflected in a grade that we give on a scale from 1 to 10. To be eligible for investment, a stock must score at least a 7 out of 10. The average of our total portfolio should score at least 8 out of 10.
2. What is the ESG score? Our ESG assessment comes into play in the second instance. The scoring method is identical and the input is more data-driven. Sources for this are our research and the interviews we have with the companies that we are considering for inclusion in the portfolio. In this process, we maintain a portfolio shortlist that meet our financial criteria of around 40 shares. These are assessed for: “Environmental” criteria (the “E”, 50% weighting) such as: CO2 emissions, water and energy use, recycling and material use, distribution methods and contributions to more circularity. Positive impact on the transition process towards clean energy weighs heavily. “Social” criteria (the “S”, 25% weighting) include, for example, safe working conditions, inclusion matters, local community projects, fair opportunities for all workers, fair incomes and gender equality. Finally, “Governance” (the “G”) also weighs 25%. This looks at the ability of companies to properly weigh and serve all the interests of stakeholders in the company. Certainly not easy, but we want our companies to operate transparently and fairly. When in doubt, we stay out.
Ultimately, minimum scores of 7 on a scale of 10 must also be achieved for all three ESG criteria. Otherwise, a company is not eligible for investment. In the final instance, we test our findings against the judgment of external ESG rating agencies. We have access to their reports via databases and we will investigate further in the event of any conflicting conclusions. This is how we safeguard this process.
Are you looking for more information about this? Please contact us.
Shareholders participate in the profits of a company through dividend payments. In the long term, these make up a very large part of the total return that shareholders make. Research shows that it even makes up two thirds of returns. Dividends are therefore very important when assessing an investment.
Dividends are paid by companies from their free cash flow or from available reserves. The management of companies that consider shareholder returns is often more disciplined in assessing investments.
Historical research has shown that the long-term return on dividend paying companies is much higher than that of those that do not pay dividends. The return of companies that manage to grow the dividend year after year is also even more attractive in the long term. These companies know how to generate reliable cash flows and earn the confidence of investors, which increases their share price.
They are able to repay (possible) debts, make profitable new investments and buy back shares. These are all things that, in addition to the dividend, can enhance shareholder returns. Do you wish to talk further about this? Please contact us.
Valuing companies is an art in itself. We have proven to be good at this. We use a process that we are happy to explain.
In doing so, we calculate an intrinsic value based on the cash flows (EBITDA), an applicable multiple verified in the private and or public markets, and we adjust this value for the net debt position, which is the difference between available cash and debt.
We compare the outcome of this calculation with the current stock market value. Does the difference in value provide sufficient potential of at least 20% and does the company fit into our portfolio, also because it meets our other strict selection criteria?
If so, it is eligible for investment. If not, we will follow the stock and the moment of purchase may come at a later time. The deliberation with regard to the allocation of the portfolio and the timing of purchases and sales takes place in the process that we call portfolio management.
We have shown that we can add a lot of value for our clients in this. Do you want to talk further? Please contact us.
To achieve our mission, we have set up an organization that combines our investment principles with our vision of what a sustainable world looks like. We have put together the best team to execute our active investment strategy.
Our fund manager, sales manager and risk manager all have many years of experience in the investment profession which has helped them develop a unique approach when it comes to assessing sustainable value in companies.
Our team is in close contact with the Advisory Board, the independent fund administrator and the regulators. This way we ensure that the interests of our participants are safeguarded at all times in a solid, controlled structure.
We keep our clients up to date in various ways about the progress of their investments and we keep a close personal approach when any possible questions arise.
Naturally, the clients and our own interests are aligned since our fund manager himself also participates in the fund. Contact us if you have any further questions.
The Sustainable Dividends Value Fund offers prospective investors access to a diversified, yet concentrated portfolio of companies listed in Europe. Equities with a dividend yield offer opportunities with significant return potential.
Crucially, given the diversity and complexity of this asset class, the Manager believes specialist knowledge is essential in order to identify, analyse and value the most attractive investment opportunities.
The Fund seeks to invest in companies with sustainable competitive advantages operating in defensible and growing niche markets, allowing them to generate high returns on capital.
The Fund intends to invest only when these businesses are available at a significant discount to their estimated intrinsic value. Key selection criteria include dividend yield, cash flows, a strong balance sheet and aligned management teams who are building their business for the long-term. Please contact us for more information.
Investing in stocks is hard for most people. Many therefore do not even start.
We consider not investing a missed opportunity because it can bring a lot of value in the long term. Historically, investing in shares simply brings the highest return.
As a shareholder you co-own a company and you take a share in the companies profit every time a service or product is sold. It is as simple as that.
The daily financial news entails significant price movements on stock exchanges. Focusing on the short term not advisable for its unpredictability. This is one of the reasons why long-term investors almost always do better than those who prefer the short term. Historically, equity investors have experienced a period of price falls every other year. We see significant drops in share prices during periods of wars, recessions, pandemics and other setbacks. These periods could be regarded as opportunities to buy excellent performing stocks at a lower price than usual. History has shown that innovative companies are resilient and persevere, even in difficult times.
With the long term in mind we can most likely help you achieve an above-average equity return with a portfolio where the risks are adequately spread. Want to know more? Please contact us.