Idea Generation (Steps 01 and 02)

Our investment team has a number of years in the market with a diverse range of relationships and experience and, as a result, can often spot ideas or trends before less experienced managers.

We have a number of sources of leads for company-specific investment ideas:

  • Quantitative models combined with data visualisation techniques to efficiently identify ideas.
  • Experience and wider reading across digital and electronic media.
  • Presentations by companies, mainly to the Investment Analysts Society. Some corporates do their own presentations, so we would attend if that company is on the closer research radar.
  • Company results. All companies release results and these are easily available to us via electronic technology.

The above are Steps 01 and 02 in our 6 Step Investment Process:

Rezco-Investment-Process-Step-01and02-Idea-Generation-and-Filters

 

Our idea generation is largely driven by our macro view, as we believe this creates the ideal tailwind environment for a company. However, this is not always the case, especially in our local market where bottom-up valuations play a more significant role due to the smaller pool of investments. We focus our best effort on our best ideas.

If there is a good macro/top-down theme, we would use that to find companies that would benefit from it. If, on the other hand, a company has a good investment case but it is in a bad industry or macro environment, yet still able to extract value from that industry or economy and the valuations allow for a good “margin of safety”, we would also invest.

Best Effort into Best Ideas

We apply a “best effort into best ideas” philosophy and will, therefore, by definition not have a ranking table of stocks. We have various screens and data visualisation tools to highlight potential investment ideas. A key objective of our process is to find enough good ideas to make it into the portfolios. As long as we are able to find enough good ideas, we will continue to add alpha through active stock selection.

Our investment philosophy is also completely benchmark agnostic and there is therefore no need to cover all stocks in detail simply because they are part of some index.

We are also making use of research from brokers such as Merrill Lynch, Deutsche Bank, RMB, Barclays, JP Morgan etc.

Quantitative Screens

We use data visualisation techniques to efficiently highlight investment ideas. Below are a few screenshots of some of our screens:

Investment Process

STEP 01 & STEP 02

STEP 01 Sources of Information
STEP 02 Sort, Process & Filter

STEP 03

STEP 03 Refine Idea

STEP 04 & STEP 05

STEP 04 Integrate Idea
STEP 05 Portfolio Construction

STEP 06

STEP 06 Assessment