The investment process breaks down into four stages.
Our experience shows that a quantitative, ratio-based filter is best suited for initially separating undervalued from overvalued securities. By consistently applying that screening the initially very large universe of more than 4,000 securities is reduced to a more manageable size. Our proven Peacock Opportunity Filter is able to identify Long and Short candidates reliably generating stable returns uncorrelated to any market or sector movement.
The fundamental analysis comprises the tasks previously detailed in the "Investment concept" section.
The major criteria for examination are as follows:
- Earning a company’s cost of capital over the cycle
- Value-based incentive schemes for managers
- Margin development
- Identification of niche segments
- Identification of structural changes in certain industries
To hedge our long book we go "short" via derivatives based on equity indices or sector indices.