HOW WE MANAGE CLIENT'S ASSETS
Bailey Roberts Group (BRG) believes that investors need to be informed and understand exactly how their money is being invested. Furthermore, we contend that knowing where your money is invested, and has purchased investments that you actually own, supported by ownership documents is critical. Unlike some other investment companies BRG takes the view that accurate accounting and correct ownership registration are key to providing financial surety for our clients.
As a firm our charter is to manage our client assets in a manner that provides complete transparency. Our goal is to achieve the required investment return with lowest achievable risk, believing that losses have a greater impact on client lifestyles than gains.
BRG Investment Philosophy
Bailey Roberts define their investment methodology as value based, meaning we seek to identify opportunities to “invest” in assets with the expectations that the purchase cost will be less than the sum of the future benefits of ownership. We concentrate on buying shares in a company or an investment in a business that is producing market leading products and services now, and well into the future.
At BRG we make decisions based on logic and facts. We analyse the following criteria when deciding on an investments ability to deliver a desired outcome for the client:
- The Business Model – A good business is one where the customers driving-demand chooses their product over a competitors, or close substitute. This occurs because there is a superior differentiation in the product or it is a cheaper alternative. The company is said to have a competitive advantage. In addition to this, the business should have a strong & durable outlook, sustainability of market share and operational efficiency to ensure it remains profitable well into the future.
- The Directors and Management – With the above as our starting point, we seek businesses that portray the above qualities. Beyond this, conduct research to ensure that they are being administered by competent and ethical management who are capable of maintaining their competitive advantage and growing the business.
- The Financial Statements – If the above markers are satisfied, the business will perform well financially and this will be reflected in the financial statements. We analyse a business’s financial statements in depth to ensure that, among many other variables, they are generating high amounts of Return on Equity, free cash flows and operate on a stable capital footing.
- The Valuation – We look for a margin of safety when analysing businesses. Only when the price is trading well below the value of the business will we buy. Value investing is where stocks are selected that trade for less than their intrinsic values. At BRG we select stocks that the market has undervalued.
BRG Investment Objectives
Maximise our client’s lifestyle by:
- Preserving Capital;
- Generating cash-flows above inflation;
- Seeking capital growth over the long-term without taking excessive risks;
- Achieving the client’s required investment return with the least amount of risk.
BRG Risk Management
While share prices will fluctuate, we understand our clients do not want to suffer a permanent loss of funds. Capital preservation and risk management is our top priority. We adopt several layers of risk management including:
- Asset Allocation – invest across five key asset classes;
- Individual Securities will not exceed 5% of the total portfolio;
- Industry limits – we determine to be diversified across the key sectors we target;
- Businesses must have a market value of at least $50 million;
- Only buying into businesses at sensible prices;