We believe there are inefficiencies in investment markets, particularly within the market for smaller listed companies. Generally, smaller companies are not as comprehensively researched as larger companies so investors may be less likely to recognise their investment potential. Our approach is to identify and take advantage of such inefficiencies in the market.
At NovaPort we:
- Buy companies, not stocks
- Believe risks are derived from the companies we own
- Take a benchmark-unaware investment approach, and
- Focus on real returns, not relative returns.
Through diligent research we can add value by identifying companies which are undervalued and are likely to be re-rated to their true value, or which have above average growth potential which has not yet been fully recognised by the market.
The outcome of our process as a high conviction investor is a portfolio that holds a concentrated number of companies at any given time, and is low turnover by nature.
We buy companies not stocks
We believe the key to success in the smaller companies market is to identify individual companies which are likely to outperform the overall market over time. We use a research-based 'bottom-up' stock picking style to find well-priced companies with an improving profit growth profile. At the same time, we pay particular attention to the quality of a company's earnings and management (amongst other factors) in order to minimise downside risk. Find out more about our selection process.
What are market 'inefficiencies'?
Market inefficiencies are any factors that cause a company's share price to move away from its fundamental value, including:
- Mis-pricing due to a lack of perfect knowledge about a company
- A lag between company announcements (eg. revised company earnings and profit) and revaluations
- Investor sentiment, and
- Other short-term influences that obscure a company's longer-term outlook.