The fund managers follow the successful investment methodology of Warren Buffett, the most successful investor ever.
This is supplemented with investment techniques worked out by ACATIS or developed from academic research. These are mainly traditional value approaches, starting from Benjamin Graham’s investment methods to modern behaviouristic approaches to internally developed approaches.
The equities are selected according to fundamental analysis (bottom-up). Important criteria are transparent reporting and a liquid market environment.
Every month we screen the investment universe according to numerous value criteria.
Our investment process has a fundamental approach, i.e. we base our selection process on fundamental and financial statement data, not on share price or economic data.
Step 1: Scanning
In our database we reduce the investment universe of 45,000 stocks initially to 12,500 stocks with a market capitalisation of more than EUR 100 million and then later to 3,900 stocks with a market capitalisation of more than EUR 1 billion.
Step 2: Filtering
We then apply statistical instruments. There are four screenings:
High Score Countries and Sectors: On the basis of the data obtained and a regression model tailored to each country and sector we determine the relative attractiveness of the countries and sectors.
High Score Stocks: A score is calculated for all the stocks based on an analysis of the metrics.
Intrinsic Return: A fast-track valuation with the variables asset value, return and growth identifies cheap stocks and calculates their expected return.
True Value: At least one key value metric (for instance price-to-book ratio) must be attractive on the basis of traditional criteria.
Step 3: Analysis
Around 20 stocks that satisfy the value criteria and also achieve a high score are analysed in detail by the fund management according to qualitative aspects. We focus especially on the company’s market position. Does it have a “moat” that keeps competition at bay and suggests that it has the clout to push through high margins? This is the main part of our work.
Step 4: Determining the fair value
A detailed valuation (fair value), conducted independently by at least two people, selects undervalued stocks with a sufficiently high margin of safety.
Step 5: Buying, adjusting and selling
Selected stocks are purchased, classified and adjusted continuously to the optimum weighting. Stocks that no longer have a sufficient margin of safety are sold.
