Our Aprroach
Universe of Investment Prospects
General Selection Criteria
• Size : €1 bln. to €10 bln. market cap
• Avoid : technology, biotech, financial service firms
• Focus on : quality, well financed, always profitable, diversified firms with recurring/predictable revenues
• Timing : out-of-favor for non-fundamental and/or recoverable earnings shorfall reasons
• “Scale in” - buy level: 4.5-5.5x EV/EBITDA
• “Scale out” - sell level: 12-15x next 12 months EPS
• Avoid risk areas not suited for a concentrated porfolio such as technology, biotech, financial service firms
• Focus on: – “Quality” companies that have:
• Interest expense less than 25% of EBITDA,
• Always EBIT profitable, i.e. avoid deep cyclical firms – Recurring and predictable revenues and cashflows
• FuncSon of nature of business, diversity of customer, products, and regions served
• Prefer consumable and MRO businesses over capital spending-related businesses
Investment Life Cycle
• Downside Support - determined through liquidation and break-up analysis and due to presence of sustainable and recurring cash flow;
• Upside Target - determined with detailed, proprietary financial model; based on “normalized and comp-based P/E on estimated EPS of one to two years forward.
Buy-Sell Discipline
• “Scale in” - buy level: 4.5-5.5x EV/EBITDA
• “Scale out” - sell level: 12-15x next 12 months EPS