SKAGEN Global: Unconstrained Global Equities
SKAGEN Global is a global equity strategy which aims to generate long-term capital growth. The fund is managed by Knut Gezelius and Chris-Tommy Simonsen.
SKAGEN Global invests in companies believed to be undervalued by the portfolio managers who apply a pragmatic approach to value. They typically look beyond companies that may be optically cheap based on traditional valuation metrics, such as Price/Book which they consider is ill-suited for a world increasingly powered by intangible assets, and place greater emphasis on profitability and balance sheet strength.
The fund combines holdings where catalysts have been identified to trigger a re-rating with 'structural winners' which are expected to outperform competitors across economic and market cycles, enabling the fund to deliver excess returns in a range of different scenarios. In keeping with SKAGEN's investment philosophy, the fund is actively managed and employs a differentiated investment strategy based on three pillars:
1. Unconstrained mandate
A broad footprint means the portfolio’s sector, geography and market cap exposure may change materially over time, depending on where the portfolio managers find the best investment opportunities in terms of company fundamentals. This flexibility, combined with the portfolio managers’ ability to adapt to different market environments in a forward-looking way, offers a distinct competitive advantage.
2. Long-term perspective
The portfolio managers' investment horizon is at least 3-5 years but can be significantly longer. They attach greater value to fundamentals than short-term trends and evaluate stocks based on long-term forecasts rather than quarterly results. This approach is particularly conducive to finding investment opportunities in companies with an underappreciated ability to compound in value over time, which is illustrated by several of the fund's core holdings remaining in the portfolio for many years.
The fund targets companies with a robust (or improving) business model where the long-term value creation potential is not yet reflected in its share price. This may be due to short-term noise but where management can get the company back on track without relying on external factors.
3. Partnership approach
Close alignment of interest is sought between company management and shareholders which places a high value on strong (or improving) corporate governance. The portfolio managers believe that thorough analysis of both quantitative (e.g. share ownership, management incentives) and qualitative (e.g. competence, integrity) factors cannot easily be replicated by a computer, which therefore provides SKAGEN Global with a distinctive edge. They also regularly engage with portfolio companies to drive positive change and value creation.
SKAGEN Global is a high conviction portfolio of 30-50 mid / large cap companies, with the top 35 holdings representing 80-90 percent of assets. The fund is actively managed and constructed bottom-up by the portfolio managers who are benchmark agnostic. They have the freedom to invest away from the index in their best ideas and this is reflected in a portfolio with which can diverge significantly from the index.
To reduce risk the fund maintains a sensible balance between sectors, which have a soft portfolio limit of 30 percent, and geographic regions. Holdings must also have downside protection, typically from their core earnings, cash flow growth and / or cost restructuring coupled with a solid balance sheet.