Our Approach to Value Investing – Fundamental Ownership of Undervalued Assets
Our Value Investing program — Graham — represents the fundamental, long-term pillar of our investment universe. Inspired by the principles of Benjamin Graham and the philosophy later refined by Warren Buffett, Graham is our own disciplined interpretation of classic value investing. It focuses on identifying undervalued, financially sound companies and holding them until the market recognises their true worth.
Where Trend Following captures long market cycles and Quant Macro exploits short-term inefficiencies, Graham is built for patient compounding based on enduring business fundamentals.
Intrinsic Value Over Market Noise
Unlike our systematic strategies, which react to price and volatility, Graham is grounded in fundamental analysis:
- balance sheet strength
- sustainable earnings
- competitive advantage
- valuation relative to intrinsic value
- cash-flow generation
- financial stability
The goal is simple: buy high-quality companies below intrinsic value and hold them through the market’s emotional fluctuations.
Because the strategy holds equities directly, it naturally has a stronger correlation to the general stock market than our other sectors — making it a long-term, fundamentals-driven complement to Trend Following and Quant Macro.
Our Own Graham-Inspired Checklist
Rather than blindly following any textbook formula, we have developed our own strict checklist inspired by the original Graham & Dodd methodology and the rational, business-owner mindset of Warren Buffett.
- attractive valuation metrics
- solid free cash flow
- durable competitive strengths
- prudent capital structure
- consistent profitability
- shareholder-friendly capital allocation
Only when all criteria are fulfilled does a company qualify for inclusion. This disciplined checklist protects us from the behavioural biases that typically undermine discretionary stock selection.
Long-Term Compounding Through Patience and Quality
Value Investing works on long time horizons. Fundamental mispricings can take months or years to unwind. During that time, earnings compound, sentiment shifts, and undervalued businesses gradually move toward fair value.
Graham embraces this long-term perspective, offering portfolio stability and steady return potential — a natural counterweight to the speed of Quant Macro and the cyclicality of Trend Following.
Risk Management Through Fundamentals
In value investing, risk comes from overpaying or owning a weak business, not from volatility. Graham therefore focuses on:
- financial strength
- durable margins
- low leverage
- predictable earnings
- conservative valuation
- margin of safety
Positions are held only as long as the fundamental investment case remains intact. If business quality deteriorates, the position is exited — regardless of price.
Aligned With Market Reality, Not Market Predictions
Graham does not attempt to forecast interest rates, macroeconomic cycles, or short-term price movements. Instead, it relies on a timeless principle: markets repeatedly misprice high-quality companies — and patient investors can profit from the correction.
This forms the third, distinctly different return stream in our investment universe:
- Trend Following captures global price cycles.
- Quant Macro exploits short-term market inefficiencies.
- Value Investing (Graham) compounds long-term equity value grounded in fundamentals.
Together, they form a balanced, diversified, and robust investment framework.
Markets Traded
The Graham program invests primarily in U.S. equities, selecting companies from a wide and diverse universe that spans both large-cap and small-cap stocks. The selection pool is deliberately broad to ensure that genuine value opportunities are not restricted to any single sector, size category, or market theme.
Our screening process evaluates companies across industries including manufacturing, consumer goods, financials, technology, services, energy, and healthcare. What matters is not the sector they belong to, but whether they meet the fundamental criteria in our checklist — profitability, balance sheet strength, conservative leverage, stable earnings history, and a clear margin of safety relative to intrinsic value.
This diversified, fundamentals-driven approach allows the Graham program to identify undervalued businesses regardless of market cycle, while maintaining broad exposure to the long-term growth of the U.S. economy.