We are Value Investors
De Novo Capital’s investment approach is based on the principles of value investing:
- Conduct independent research and analysis.
- Focus on the underlying business, not short term stock price swings.
- Only invest where we see value.
- Invest for the long term.
- Use market swings to our advantage.
- Be willing to admit when we are wrong and change course quickly.
The portfolio manager will conservatively estimate the intrinsic value of the companies analyzed and only invest when the price is less than this independent assessment of value. Over time, we believe the share price will reflect the intrinsic value of the business.
While the portfolio manager gives consideration to overall economic and market conditions in our analyses and investment decisions, the investment process is “bottom-up,” focusing on companies that will provide good returns over the long term as opposed to trying to predict short term market movements.
We are opportunistic
Many asset management firms invest in indexes or own hundreds of stocks, meaning their returns will mimic the market. De Novo Capital’s client portfolios are concentrated in our best ideas, with generally 12-20 holdings. This allows for focused analysis and lets our best ideas flourish while avoiding stocks that are overvalued.
We are independent
Our independence allows us to move quickly when opportunity knocks.
Rather than follow the crowd into fads or bubbles, De Novo Capital uses selectivity, patience and discipline to take advantage of the mood swings of the market. Stock market volatility provides the opportunity to buy stocks at less than their intrinsic value or sell them for more.
De Novo Capital often holds a portion of our portfolios in cash until we identify investments offering attractive long term returns. While this may reduce returns in a rising market, having cash available in market declines allows us to take advantage of market swings and buy stocks at prices offering attractive long term returns.
Our strategy is a good fit for long-term investors looking to invest a portion of their assets in a concentrated portfolio in pursuit of differentiated returns.