About Aberforth

Value Style & Investment Process

Our value investment style and the process applied to investing

Table of Contents

Philosophy

We are value investors who seek to purchase shares in companies that are selling below their intrinsic value. The chosen investment universe yields a disproportionate number of value opportunities as a consequence of greater inherent business volatility, lower liquidity and less abundant flows of information.

Valuation anomalies arise as a consequence of weak macroeconomic conditions temporarily depressing trading, through poor execution undermining an attractive business model or peripheral activities obscuring a strong core business. The forces that drive a divergence from underlying value are often temporary and may be reversed through greater investor interest, management action or corporate activity. Investments are held until the value gap closes; the average holding period is some three years.

Intrinsic value is determined through the internal research efforts of the experienced, well resourced and motivated investment team taking a long term view. Our investment managers combine detailed financial and industrial analysis with a valuation approach that focuses on both stockmarket and corporate worth. Consideration is made of competitive position through, inter alia, assets employed and intellectual property. Furthermore, when required to protect shareholder interests, the team undertakes discreet engagement, leveraging its experience, its long term relationships with investee companies and the often significant stakes held across the Aberforth client base.

In Practice

Further details are set out in our Investment Philosophy and putting it into practice document which is available here.