Alleron believes a portfolio of stocks with sound growth characteristics, transformative possibilities and a margin of safety can deliver great outperformance.
Good quality growth stocks will have characteristics such as growth in product markets, brand and product differentiation and management expertise. Alleron also likes to see a demonstrated willingness to deliver returns back to shareholders. Stocks with these characteristics can provide a great margin of safety while retaining the ability to create a new paradigm for themselves and their investors.
A valuation edge occurs when short term price behaviour fails to reflect longer term fundamental factors. An exciting example of such mispricing is when it underestimates the likely impact of emerging positive or negative change in a company’s underlying businesses.
Alleron believes that a qualitative, imaginative approach grounded in real experience is best for identifying emergent change that can transform the value of a company.
At a portfolio level, the risk and return characteristics can be fine-tuned using rigorous quantitative techniques and melding those techniques with creative insights to ensure all identified risk is rewarded.
Alleron believes culture is the foundation needed to stay the course. Culture is knowing who you are! To paraphrase Epictetus – “Circumstances do not make the team, they only reveal the team to themselves“.