Stock selection is based on a so-called core stock analysis, which focuses on the attractiveness of a sector, a company's position in the sector and the reasons for the company's competitive advantages. A sector's attractiveness is determined mainly by factors outside the company's influence, while the company's position in the sector is very much dependent on the decisions made by the company's management.
For each company, we undertake a close examination of sector growth, the earnings situation, development potential, market position, risk factors, management and shareholder value. All these factors are scored and weighted according to their significance. In this way we obtain an indication of the company's long-term ability to create value and thus its return to shareholders. The core analysis reveals changes in a company's fundamental circumstances more rapidly than traditional accounting figures.
This close examination includes regular contact with the companies we invest in and, if possible, a company visit at least once a year. We also emphasise a disciplined use of research from the major brokerage firms as well as direct contact with their analysts. We aim for a portfolio consisting of at least 20 stocks in order to obtain a reasonable diversification of company-specific risk. The number of stocks in a portfolio also depends on the individual portfolio's market value, investment universe and risk tolerance.