Background
The Global Listed Agriculture Sub-Portfolio seeks to achieve capital appreciation by investing in a concentrated portfolio of agricultural industry stocks globally. The Fund intends to invests in companies that are expected to create shareholder value over time and have business franchises that are resilient across agricultural cycles. The Fund aims to deploy capital into stocks only when they are trading at prices that it believes do not fully reflect their long-term potential.
Fundamental Drivers of Value
Idea Generation: The Fund aims to identify markets & structural themes within the agricultural industry, with potential for value creation, including the identification of drivers of structural changes and competition dynamics that will affect profit pools and shareholder returns.
Stock Selection: The Fund aims to identify companies that are expected to grow shareholder value over the long term and have business franchises that are resilient across agricultural cycles. Through the application of a bottom up stock selection the Fund seeks companies that display the following key characteristics:
- Predictability
- Sustainable business franchises
- Sustainable cash generation
- Strong Balance sheet growth
- High quality management
Portfolio Construction: The concentrated portfolio will comprise stocks with structured position sizing to reflect the Funds conviction in thesis and potential upside. The Fund also includes provision for an opportunistic exposure, limited to a maximum of 20% of the equities sub-portfolio, which seeks to generate increased returns over a shorter investment horizon through exposure to mispriced agriculture related equities, and macro-economic thematic events.
Risk Management: The Fund maintains a strong buy and sell discipline. Investing only when there is a margin of safety in order to mitigate permanent capital loss. Positions are exited immediately when the fundamentals of a business are observed to have changed, and/or the original investment thesis is no longer valid.
