We believe long-term share prices track underlying business fundamentals and material alpha is achievable by identifying smaller, mature, and structurally misunderstood businesses. We also believe CEOs who understand their role as capital allocators are better at creating shareholder value over the long term.
We buy businesses with proven track records of disciplined capital allocation, aligned management, and potential for long-term value creation. Valuations are fundamental to our process and we aim to buy undervalued businesses.
CDAM's Global Equity strategy aims to invest in a low turnover, highly concentrated portfolio of attractively priced, fiscally conservative companies led by CEOs with exceptional capital allocation track records. The portfolio is biased toward mid/small cap companies with long holding periods.
Our investment process emphasises management's disciplined capital allocation track record, ownership alignment, ability to increase free cash flow per share and sustainable organic or inorganic growth. The resulting portfolio seeks to mitigate the risk of losses while providing attractive returns to long-term investors over an entire market cycle.
One of CDAM’s core beliefs is that: Value is created when the return on capital exceeds the cost of capital. We use this to guide our ESG policy which is at the forefront of our investment process.
At CDAM, sustainability means a company that does not borrow from its future to benefit the present. Our experience suggests if a business runs too fast or takes shortcuts, the consequences to its stakeholders and investment returns are generally poor.
Companies with deficient ESG policies are likely to see their cost of capital rise. The combination of lower future returns on capital and a higher cost of capital make it difficult to create shareholder value. Good ESG practices have always been good for business, which is good for the long-term shareholder.
Our investors typically use our strategy as a return generator in their satellite portfolio or as an unconstrained alpha strategy in a portfolio of managers.
We work with long-term investors who share our values and belief in fundamental investing.
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