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Investment Approach

Karara is a style agnostic investor. This means we look for value, yet recognise growth as a key determinant of this value.

We take an 18 month to three year view when investing. This is important because:
  • Fundamental investment tools work better over longer periods
  • Moderate portfolio turnover lowers transaction costs and helps our client's after tax returns

Karara's approach has been widely endorsed by the retail research and asset consultant community. 

How we select investments

 We invest where we can answer three questions:

  1. Is this a fundamentally attractive company?
  2. What is our point of difference that the market is missing?
  3. Is it in the price?

What makes a 'fundamentally attractive' company?

  • One we can understand and which has talented and honest management
  • One that will sustainably create and grow economic value
  • One that has an appropriately structured balance sheet

Where does our 'point of difference' come from?

  • Anticipating change. We look for changes at the margin which precede improvement in outlook. We ground our view of the future by looking at history
  • Our process systematically distinguishes between fundamentals and consensus expectations
  • A broad perspective. We pay ‘top down’ consideration to structural and cyclical factors

If price vs value frames the investment decision, how do we know if 'it's already in the price'?

Our insight is valuable if:

  • It leads us to a non-consensus view of future free cashflow
  • We have a comfortable margin of safety

How we build portfolios

 How much of a company we buy is determined by:

  • its expected return,
  • the predicabiliity of its business and,
  • the diversity of the underlying insight relative to other companies we hold.

We buy large positions in high conviction, high return opportunities. The outcome is a relatively concentrated portfolio that contains a diverse range of attributes. In our experience this leads to more consistent returns over time.

 

Learn more about our strategies

Karara's approach to ESG

In Karara's experience those companies that best manage environmental, social and corporate governance (ESG) risks, impacts & opportunities are more financially sustainable in the longer term and positioned to deliver better long-term financial performance and returns to our clients.

Consequently, we believe that the ESG performance of the companies we invest in is not only a proxy for the quality of management and the sustainability of the business model, but is also relevant to the overall performance of our clients' investment portfolios.

As a result, we believe that the integration of ESG into our investment analysis and investment decision making is essential.

In addition to financial considerations Karara believes that companies, as a matter of principle, should act in a socially responsible manner. They should conduct their business in a way that recognises their responsibilities to employees and other stakeholders, as well as to the broader community and the environment.