Our purpose is to empower our clients by enhancing their savings and wealth. In seeking superior risk-adjusted returns for our clients, we aim to invest in securities of companies that trade at a significant discount to our assessment of their intrinsic value, being the price that a prudent business person would pay for the business.
We have designed our investment process to maximise the chances that we can successfully implement our fundamental, long-term and contrarian investment philosophy. Our analysts use a structured research process to eliminate unattractive ideas in the early stages so that they can concentrate their efforts on only the most promising ideas.
As part of this bottom-up research process, our analysts consider a range of factors that might affect a company’s intrinsic value, which can include environmental, social and governance (ESG) issues. For example, if a company makes money in a manner that is not sustainable from an environmental or social perspective, the analyst will not gain conviction in the sustainability of its current level of profits. Similarly the consideration of governance issues is a critical part of an analyst’s assessment of a company’s intrinsic value.
Our analysts’ research of ESG factors informs decisions not to invest in a company as much as it informs decisions to invest, although there is no ESG issue that would automatically prevent us from investing in a company unless otherwise restricted by a Fund’s investment mandate. Approximately 15% of Orbis' assets under management are invested in an Australia-registered Fund that will not invest in companies directly involved in the production of tobacco or controversial weapons.
Just as there is scope for different views on the sustainability of a company’s competitive advantage, there is scope for investors (and individual Orbis analysts) to have different views on ESG matters. We believe that by performing rigorous, fact-based research on ESG matters, we may from time to time form a divergent view from the consensus that may alert us to the opportunity to buy a security at a discount to its intrinsic value.
All “Phase Three” fundamental research reports that are submitted to a Policy Group Meeting – a forum for rigorous peer review – include a section on relevant ESG matters.