Strategies
Active Fundamental Equity
Insight
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Insight |
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Strategies
Active Fundamental Equity
Insight
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Insight
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Counterpoint Global believes that it may achieve value-added investment results more consistently through bottom-up analysis and qualitative judgment rather than through top-down forecasting. Additionally, the team holds that optimal stock selection is primarily a function of making long-term investments in companies with: inherent sustainable competitive advantages (such as a patent portfolio, a network or community effect, etc.); brand-name recognition; the ability to redeploy capital at high rates of return; and strong free-cash-flow yield three to five years in the future. These characteristics, in the team’s view, provide the potential for consistent long-term growth and competitive returns.
The team believes that the development of insights is valuable to the investment process, and guiding principles combined with intellectual and process flexibility are critical to strong decision-making in pursuit of attractive investments.
Culture |
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The team’s culture is shaped by four core values that are cultivated and reinforced in many ways: intellectual curiosity and flexibility, perspective, self-awareness and partnership. |
Reading Network |
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The team’s reading network includes more than 100 investor and non-investor participants at Morgan Stanley, leverages the distributed knowledge of the firm and encourages cross-disciplinary thinking. Each week the team circulates articles, essays and thought pieces from a wide range of sources outside mainstream Wall Street in order to help enhance its knowledge and inform investment decisions. |
Value-added through focus on broader perspective |
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The investment team analyzes companies across the market-capitalization spectrum, and each team member typically follows more than one industry where the business models are distinctly different. |
| 1 | Idea Generation |
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The team generates investment ideas through an ongoing set of activities: (i) involvement in contact networks across industries and in the investment management business; (ii) its reading network; (iii) its focus on Return on Invested Capital and free-cash-flow yield; (iv) Team discussions; (v) the identification of patterns; (iv) conventional-valuation and coverage biases, among others; and (vii) continual research on current company holdings. |
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| 2 | Bottom-up analysis and valuation |
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The team narrows its idea generation by seeking stocks that reside in the intersection between its views of a company's business quality, growth quality and risk/reward characteristics. Valuation focuses on free-cash flow yield three to five years in the future. |
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| 3 | Disruptive change research |
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To complement its in-depth, bottom-up research, the team's disruptive change researcher investigates big ideas and emerging themes that typically may have far-reaching consequences, such as nanotech, infrastructure and the global water shortage. |
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| 4 | Portfolio construction and implementation |
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The team's portfolios are actively managed and built to maximize expected value. Company weightings are primarily determined by the quality of the idea and the team's conviction. Each member of the investment team helps drive stock-picking, with at least two of the three most senior members typically involved in final construction decisions. The team expects its portfolios to be well-diversified, and reviews factor analysis on a monthly basis in order to ensure the portfolio's risk is more idiosyncratic than systematic. |
