Centaur’s methodology approach is to weigh up quality+growth vs. value. We buy undervalued companies that grow over our time horizon. Excess returns occur via both the growth of the company and arbitrage returns as the share price moves towards fair value. This approach is illustrated in the diagram below where the growth in a share of 15% per annum is geared up to 25% returns via this arbitrage effect.
Our methodology approach is unique in that we segment the SA equity market into 11 Areas of Opportunity:
Each area of opportunity requires our analysts to follow a different analytical approach so that each share can be evaluated correctly. There are added diversification benefits to investing in each unique segment.
We have incorporated our methodologies into a proprietary stock-picking engine, called Top-seg, which dynamically weighs up value vs. quality+growth on a real time basis.
This stock-picking engine allows us to rapidly evaluate value in a volatile environment and make investments when the risk-reward ratio is at is most favourable. As a result we see beyond short-term volatility giving us a better perspective of long-term value and give us greater conviction when making investments. We combine this stock-picking engine with quantitative asset allocation and risk management to further improve the risk-reward ratio of our portfolios.