Corporate activity is a rich source of investment returns and encompasses a multitude of opportunities – takeovers, mergers, asset sales, demergers, and restructurings, amongst others. Opportunities are often mispriced as the strategy is viewed as unattractive by larger professional managers (typically owing to capacity constraints) and as such, often ignored.
Within a well-constructed portfolio of such opportunities, the performance of each position becomes largely driven by stock specific factors rather than broader equity market movements and macroeconomic influences. The benefit of a portfolio constructed entirely from such opportunities is that not only does it exhibit minimal correlation to market indices, but minimal correlation within the portfolio itself. Appropriately managed, it is a strategy characterised by attractive risk adjusted returns, capital preservation, and true diversification.
Over the last decade we have constantly refined a strategy that encompasses everything from opportunity identification though to position crystallisation. The investment strategy works hand in hand with risk management at the portfolio level to ensure each position is risk weighted appropriately to the transaction specifics, which is key to extracting optimised performance. Our experience and robust investment process sees us well placed to assess all relevant variables for a given transaction and compare available returns against those risks in order to determine if a position should be included in the portfolio and if so, at what level of exposure.