Investment Philosophy
Our philosophy at NAOS is to continually pick undervalued stocks through the use of a thorough bottom up quantitative and qualitative approach to investing. This not only involves analysing financial forecasts and financial strength of the business, significant time is also spent analysing management and the industry that the company operates within.
At NAOS we believe that equity market inefficiencies create excellent investment opportunities over time for stocks to grow at greater rates than the market. These market inefficiencies are brought about by investors having a short term focus, investor bias towards particular stocks, as well as an overly dominant focus on a company's profit and loss statement. Whilst a company's financial profitability is important, it is not the most critical factor of a company's stock valuation and its future growth potential.
Our portfolios, particularly the Small Companies Fund, consist of numerous stocks which are not covered in detail by brokers and analysts. Therefore the team at NAOS carry out in depth research on these particular stocks, consisting of:
- DCF Models
- Site Visitation/Research
- Company Meetings
- Quantitative/Qualitative Valuations
- Project Breakdowns
- Profit & Loss Analysis
- Industry Analysis
- Momentum Analysis/Forecasts
In our view, no single technique in isolation is preferred to another, as valuable company information can be gained through a combination of various avenues, all with a focus towards gauging a stocks medium to long term value. In doing so, our team seeks out well-managed undervalued companies with a comparative advantage that translates into higher returns over the medium to long term.