- Managed by Jack Barrat, who has over nine years of investment experience and is the co-manager of the GLG Undervalued Assets Strategy
- Process seeks to identify:
- Companies with assets or returns that are significantly undervalued by the market
- Stocks that are overvalued, with returns and outlook that are deteriorating
- Strict rules for position sizing, portfolio construction and risk management are implemented
The Strategy employs an absolute value framework developed by the team over the past ten years. It models companies in the UK market in terms of the value of their tangible assets and the return they make on that tangible asset base (‘EVA’ analysis).
Within the long book, the team seeks to identify companies trading below their estimation of replacement cost (‘Undervalued Assets’) or whose profit streams are undervalued (‘Undervalued Returns’). The key safety checks on these companies are cash generation and positive earnings momentum analysis.
For the short book, the team looks for companies trading at a multiple of their tangible asset base that they believe is not justified by the returns they are making (‘Overvalued Assets’). They will also seek companies that are cheap, based on their returns, but with falling incremental profits, estimate downgrades and excessive cash consumption (‘Overvalued Value Traps’).
The team undertakes further fundamental analysis and bespoke modelling on companies that meet the above criteria to construct a high conviction portfolio of 70-90 stocks, expected to be split equally between long and short positions1.
1. The limits and/or targets illustrate the Investment Manager’s current intentions, and are subject to change without notice.
Long resilience and short fragility may be the best opportunity to generate a positive return from future cycle volatility.
Man offers a comprehensive suite of investment solutions and formats that can be tailored and optimised to meet specific client needs. Our investment solutions offer optionality including: liquidity, control, investment restrictions, investor customisations and transparency.
Access to investment products and mandate solutions are subject applicable laws and regulations including selling restrictions and licensing requirements. Investment solutions listed above may not be compatible for all investment strategies and may be subject to minimum subscription requirements. Regional Funds: In additions to UCITS and AIFs registered across the EEA, a number of investment strategies are available in vehicles registered in Chile, Netherlands, Hong Kong, Japan, Singapore, South Korea and Switzerland.
One should carefully consider the risks associated with investing, whether the strategy suits your investment requirements and whether you have sufficient resources to bear any losses which may result from an investment:
Investment Objective Risk - There is no guarantee that the Strategy will achieve its investment objective.
Market Risk - The Strategy is subject to normal market fluctuations and the risks associated with investing in international securities markets and therefore the value of your investment and the income from it may rise as well as fall and you may not get back the amount originally invested.
Counterparty Risk - The Strategy will be exposed to credit risk on counterparties with which it trades in relation to on-exchange traded instruments such as futures and options and where applicable, ‘over-the- counter’("OTC","non-exchange") transactions. OTC instruments may also be less liquid and are not afforded the same protections that may apply to participants trading instruments on an organised exchange.
Currency Risk - The value of investments designated in another currency may rise and fall due to exchange rate fluctuations. Adverse movements in currency exchange rates may result in a decrease in return and a loss of capital. It may not be possible or practicable to successfully hedge against the currency risk exposure in all circumstances.
Liquidity Risk - The Strategy may make investments or hold trading positions in markets that are volatile and which may become illiquid. Timely and cost efficient sale of trading positions can be impaired by decreased trading volume and/or increased price volatility..
Concentration Risk - The Strategy invests in a limited number of investments may be held which can increase the volatility of performance.
Financial Derivatives - The Strategy will invest financial derivative instruments ("FDI") (instruments whose prices are dependent on one or more underlying asset) to achieve its investment objective. The use of FDI involves additional risks such as high sensitivity to price movements of the asset on which it is based. The extensive use of FDI may significantly multiply the gains or losses.
Leverage - The Strategy's use of FDI may result in increased leverage which may lead to significant losses.
Single Region/Country Risk - The Strategy is a specialist country-specific Strategy or focuses on a particular geographic region, the investment carries greater risk than a more internationally diversified portfolio.
Total Return - Whilst the Strategy aims to provide capital growth, a positive return is not guaranteed over any time period and capital is in fact at risk.