Investment Approach
Foord is a fundamental earnings house that takes long-term views and patiently waits for prices to follow earnings. We do not trade on market sentiment. We are confidently different from our peers and take sizable off-benchmark positions in businesses that offer asymmetric risk-reward to protect investor capital and deliver a safe investment yield. We construct diversified investment portfolios based on rigorous fundamental research, high conviction ideas and an adaptable, value-driven investment policy.
The understanding and management of risk is core to the Foord investment philosophy. Our favourite definition of risk is Elroy Dimson’s: “More things can happen than will happen.” It most certainly is not “what has happened.” We therefore take a forward-looking approach and make investment decisions today that aim to protect investor capital across an array of future possible outcomes, knowing that most of those possible outcomes won’t happen.
Because we are dealing with potentially many futures, we do not build portfolios for only one possible outcome. This applies whatever our conviction of that outcome’s probability of occurring. We will also often be wrong in our views and forecasts. We must therefore have balancing positions that we think, on average, will achieve the investment objective regardless of how the future transpires.
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philosophy
Achieve superior long-term returns by focusing on long-term earnings (over the long-term, stock prices will follow earnings); we take a truly long-term view, we are patient, we buy at the right price. The tenets of our investment philosophy are the lights that guide what we do.
process
Rigour and intuition are combined in a fluid and continuous process that brings structure and flexibility to portfolio management.
investor
Investors and their portfolios are at the centre of our operations.
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Foord’s global investment team is characterised by considerable experience. Many of the senior investment professionals have spent significant time at Foord.
Ideas are drawn from the entire investment team as part of Foord’s multiple-counsellor process. In conventional fund management, a single fund manager typically takes full responsibility for the management of a portfolio. In contrast, the multiple-counsellor approach involves dividing the assets of each portfolio among a number of portfolio managers. These managers then make independent investment decisions and manage their portions as though they were separate funds, but with full transparency. While the Foord hierarchy is flat and highly collegial, accountability for multiple-counsellor returns is squarely on each portfolio manager.
The emphasis on individual decision making within a team environment is premised on our belief that, for the most part, individuals produce better results than teams: Committees tend to dilute investment ability because the right decision is unlikely to meet with consensus approval. Individual authority and accountability results in swift decisions, keeping distance between the seed of a good investment idea and its implementation as short as possible.
“I am a strong believer in the value of long-term investing, finding companies with sustainable moats and buying them at prices that provide margin of safety.”
- JC Xue, Portfolio Manager
