Investment Process
Beresfords primary focus is on the quality of companies included in your portfolio. The Beresfords investment process starts by narrowing the more than 2,200 Australian listed companies to the top 500 shares through quantitative screens. These screens filter companies by trading liquidity and market capitalisation.
This removes most of the markets lower quality and more speculative companies. It also allows the investment team to focus a more detailed research effort on a list of opportunities with a higher probability of meeting our portfolio selection criteria.
Investments are then evaluated in terms of quality, catalyst and value.
Quality
High quality businesses will generally deliver more stable and predictable outcomes for investors. Our research effort is especially interested in the sustainability of the business model, balance sheet strength and management capability.
Share price catalyst
Before we invest in a business, we first identify catalysts or reasons for the share price to rise in value in the future. It is not enough for a business to simply be high quality, it must be on a path that can make it more valuable within our investment timeframe.
Value
Valuation is considered to ensure that share price upside still exists. We asses a company's value relative to its trading history, sector and relative attractiveness to other investments the investment team is considering. Common fundamental measures of value we use include one or more of the following:
- Price/Earnings Ratio
- Dividend Yield
- Earnings Yield
- Price/ Operating Cash Flow
- Assets
- Relative Value
Best ideas
By considering quality, share price catalysts and value the investment team is able to compile a list of best ideas that are suitable for investment. Some businesses may not be suitable for investment now, but be identified as likely to become suitable in the future, in which case they will be more closely watched by the investment team.
Portfolio construction
When constructing the final portfolio, we ensure that the selection of holdings is carefully diversified to include exposure to a variety of different investment themes, sectors, companies and ideas. This reduces portfolio volatility through different market conditions and also ensures that the portfolio can benefit from a wider variety of possible outcomes in global markets.
Portfolio turnover
Beresfords has a long-term investment horizon and seeks to maximise after tax returns so portfolio turnover is expected to normally be less than 30%.
