At Valuepoint Asset Management we believe that high quality companies with a sustainable competitive advantage will outperform over time. We therefore set a bar for a minimum quality that must be reached before a company is deemed investable. A sustainable competitive advantage will allow a company to generate returns above its cost of capital. This allows the company to add value when reinvesting in its own business. If a company has a return on capital below its cost of capital, it will destroy value when reinvesting.

Easily understood business models and revenue drivers will also have fewer negative surprises. Therefore, we must understand how a company makes its money before making an investment. If the company is opaque and aggressively financially engineered, we will not put client’s money at risk in these sorts of businesses.

It is important to differentiate between investing and speculating. Investing refers to a systematic approach to deliver a quantified investment return based on an assessment of risk required to deliver that return over a target investment horizon. On the other hand, speculating is buying or selling a stock in the hope that its share price moves favourably so that you make money.

Share market prices are more volatile than underlying business performance. At Valuepoint Asset Management we take advantage of these dislocations to find attractive investments for our clients to make strong risk adjusted returns. We invest in sound companies with dividends or stock buy backs to provide downside protection. Our end result is strong absolute tax effective returns.