We analyse relevant information to identify the sustainable, ‘normalised’ economics that impact an investment and its potential to generate cash flow. We also strive to understand structural and cyclical forces in operation, to adjust for temporary distortions to cash flows and to conduct long-term analysis of the history of the business and industry.
We pay particular attention to how our valuations could be wrong, we focus on different scenarios and derive a probability band around our central intrinsic value estimate.
ESG considerations are an important part of our overall investment process. ESG integration into the investment process includes quantitative analysis of material ESG factors and inclusion of those in the valuation process. Incorporating ESG is a dynamic process that often requires a different approach for each company. We therefore spend a lot of time understanding the specific ESG issues a company faces and how we can best incorporate it into our investment thesis.