Australian Small Companies Specialist
Monash Investors aims to identify business which are likely to undergo step-changes (either positive or negative) in their business prospects which will lead to oversized share price movements.
We draw upon our experience in order to exploit recurring business situations and patterns of behaviour, to identify and invest in a portfolio of compelling opportunities.
Recurring Situations
At the core of the Monash Investment Philosophy is the view that in business there are certain activities/events that can result in material changes in business prospects. Some examples include new products or services, store rollouts, geographic expansion, business cycles, sudden management changes and regulatory changes.
As Investment Managers, the challenge is to identify when these situations will actually make a difference. This is where Monash’s decades of experience and extensive company research come into play.
Compelling Investments
A compelling stock must exhibit the following four attributes
Growth – It must have a high level of cash flow growth
Insight – The stock is misunderstood or underestimated and we know how and when the situation will be rectified
Value – It must have significant upside based on our assessed valuation
Event – There are near term catalysts that will confirm our insight
Whilist these attributes are straightforward to articulate, findng them is where the hard work begins and our decades of experience plays a major role
Portfolio Construction
Monash Investors’ target universe is Australian Small Companies, defined as all stocks outside the S&P ASX 100 Index. However, should our research uncover compelling opportunities within the S&P ASX 100 Index, up to 20% of the Fund can be invested there.
We undertake extensive bottom-up research focussing on stocks that meet our four criteria for compelling investments (Insight, Growth, Value and Event). When this research uncovers a company likely to suffer material adverse business conditions we have the flexibility to invest up to 20% of the Fund in shorting these opportunities.
Portfolio position sizing is determined by triangulating 1) Monash’s confidence in the investment case, 2) the level of valuation upside and 3) the level of liquidity.
Selling Discipline
A key source of value add often overlooked!
Monash Investors monitors all of our positions against predetermined price targets, changes in consensus estimates, movements in Short Interest, and how the business is tracking against key signposts. The adverse triggering of any of these items results in an active response by the investment managers. This selling discipline has been honed over the years as an effective risk control.
Learn about the Fund
The Monash Investors Small Companies Fund (Fund) offers investors an Australian Small Companies equity fund with an investment objective to outperform the S&P ASX Small Companies Total Return Index read more
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