Speaker 0:
So there are four key elements of our investment philosophy. We're looking for companies that are high quality have earnings momentum.

Speaker 0:
Um, uh, the valuation is important and we're macro aware. So taking each of those in turn, the reason we want to invest in high quality companies is because in small cap, this is a riskier part of the market. And there are a lot of low quality, high risk companies that are very volatile and frankly, in our experience, deliver no return, whereas higher quality companies tend to be less volatile and deliver better returns over the long term.

Speaker 0:
And the market inefficiency here that that we're exploiting is that, um, we we think the market has quite a short term investment horizon where it tends to undervalue higher quality companies because it's focused on on current earnings rather than the greater earnings potential in the future.

Speaker 0:
Um, and it overvalues lower quality companies where the focus is on earnings now, rather than what will become deteriorating earnings in the future. Earnings momentum. What we mean. There is companies that are delivering profits ahead of the market's expectation. That is the evidence of the quality coming through that these companies are producing earnings and cash flows ahead of what's priced in

Speaker 0:
and talking of what's priced in. It's important that you understand the valuation and what the market's expectation is for that company. We do a lot of analysis on that and compare that to the potential earnings future earnings potential of the company that we see. And on the macro, we think you can't ignore the macro. It has a big influence on on individual stock returns. So what we try to understand is

Speaker 0:
where we are in the macroeconomic cycle, the rate of change in economic growth and inflation specifically, and that has a big influence on on style factors sector which sectors are outperforming and then, ultimately, which companies will outperform and underperform. So we understand where we are on the cycle to determine ultimately, which stocks we hold in the portfolio.

Speaker 0:
Our approach is to use a combination of quantitative screening and company analysis to identify the winners from this, uh, large stock universe. So in in small cap, it's it's two thirds of the publicly listed stocks, uh, in the in the world, about 9000 stocks are in our universe, and

Speaker 0:
as a first step, Really. The the only the only approach is is to have a quant screen to whittle that universe down to a more manageable number. And we have a proprietary company scoring model where we score every company in the in the universe on a range of factors that we believe are predictive of, uh, future share price returns. We focus on on high scores, and we we discard, uh, low scores.

Speaker 0:
Um, we take that short list of high scoring companies and we, uh, we make an initial assessment of the fundamentals, uh, to see if they support the score and and we discard those where we think we're getting a false signal.

Speaker 0:
Then, with the shorter short list, we do the deep dive company analysis where we're analysing the financial statements, reading internal external research on the company, meeting the company, analysing the valuation, and so on to determine whether the stock is a buy or to be avoided. And the buys then feed through into our portfolio construction process.

Speaker 0:
So I would certainly highlight, uh, our experience and and the breadth of resource that we have at Premier My, um I've been managing global smaller company funds now for over 11 years and image of my colleague has worked with me for for over five years. So, uh, we we've been doing this a while and and we we know what works and what doesn't. And we've built a process here at Premier Might that we think is the

Speaker 0:
the the best process, the right process for delivering peer group leading returns. But I I think I'd also highlight from an investment philosophy point of view of our focus on earnings momentum, valuation and the macro

Speaker 0:
means that we're we're investing in companies that are beating expectations on profits that are undervalued, that have a positive trend, or tailwind, uh, from a style factor sector and macro perspective. And that means we we tend not to get stuck in in in an underperforming style, like our growth only or or value only competitors might do.

Speaker 0:
Um, and that tends to mean that we deliver better returns at lower volatility over the course of the full investing cycle.

Speaker 0:
Um, and one more point is, you know, this is a relatively young fund and and a smaller fund at the moment, Um, which means that we don't have any capacity or liquidity constraints, so

Speaker 0:
it means we can invest in the smaller small cap stocks and we can take action quickly when we identify an opportunity.