A quality and value-driven, absolute return approach

LGM's investment professionals operate as one team, applying one investment philosophy and process across our core strategies.

We believe that free cash flow growth and stock price performance are correlated over the longer term. Therefore, we invest in “quality” companies that can compound free cash flow driven by a high returning, sustainable business model.

We are benchmark agnostic as we don’t believe that the current benchmark reflects the structural growth potential of Emerging markets. As such, we invest with an absolute mind-set as we believe indices reflect past growth while investment is for the future.

Quality is essentially determined by all internal as well as external factors impacting a business and its long-term prospects. However, we believe that certain factors have proved to be more important over the long term. High quality companies are characterised at LGM as those having a:

• Sustainable business model, which enables the company to generate substantial excess returns over their cost of capital throughout their business cycle;
• Robust balance sheet;
• Proven management team with a disciplined capital management; and
• Clear and fair alignment between majority and minority shareholders.

Although we look for quality companies across all sectors, we typically find a higher proportion of these names among the domestic sectors of the economy — mainly consumer, financial services, telecom and healthcare. There are generally fewer opportunities in capital intensive sectors such as materials and energy and a higher representation amongst asset light companies.

We aim to invest with a long-term perspective, typically a business cycle of 5-10 years.

Our investment philosophy is based on quality investing, long-term analysis and trust, together with a recognition that indices are historic and do not reflect future opportunities.

Quality

We believe that by investing in high quality companies over the long term, the compounding of consistent returns will lead to superior investment results. Time, we maintain, “is your friend” and quality is the starting point for all investment decision-making.

Long Term

In the short term asset prices are volatile; over the long term we believe that the value of an asset should be reflected in the share price.

Trust

Trust is inherent in our business activities. Above all, we respect the trust that our clients have in our investment team to steward and to grow their capital. Trust is also implicit in our relationships with the management of the companies in which we invest.