Solar Value Fund Ltd. is a mutual fund that invests primarily in internationally listed stocks. The emphasis within the Fund is on the individual selection of stocks based on thorough in-depth analysis and not on general market movements in the securities markets. The Fund’s manager may also utilize currency instruments.
The manager’s approach is characterized as a value-oriented approach. Within the established universe of stocks, the manager looks for companies with a high cash flow, that have undergone or are undergoing reorganization, and that have prospects of major future profits that the market has not yet taken into account.
The Fund intends to make substantial gains through a combination of concentrating investments in stocks that are strongly undervalued and actively managing the stock portfolio.
The portfolio usually consists of a number of stock positions with a range of between 1% and 10% per share. The stocks are carefully selected. They will be strongly undervalued, in the manager’s view, with respect to their real calculated value, which will be reflected in the share price within a period of 12 to 24 months.
Hallmarks of the Selected Stocks
The hallmarks of the selected stocks are:
- market capitalization between Euro 500 million and Euro 10 billion
- insufficient information or a lack of analyst interest
a - a broad range of products
b - inconsistent or unclear profit history
c - recent financial or company reorganization
d - absence of analyst interest
e - poor current or former management
- very attractive cash flow, potential improvement of profit development, strong balance sheet ratios that will be recognized and evaluated by a combination of the following factors:
a - the passage of time
b - restructuring, such as sale of company divisions, spin-offs, stock issues, or restructuring of debt position
c - change of management
d - activity of shareholders
e - takeover or a management buyout
- a sharp drop in share price, the manager’s selection process is contrarian and focused on companies that fulfill the above criteria and whose market price has dropped sharply to a level at which an attractive investment can be made with a limited downward risk and a good opportunity for a sharp hike in the share price within a period of 6 to 18 months.