Investment Philosophy
Hanoverian Capital aims to create long-term capital appreciation through a concentrated international equity portfolio invested in stocks with excellent prospects for earnings and cash flow growth and with attractive valuations. We believe that, in the long-term, stock prices will follow earnings and cash flow growth, but we are extremely cognizant of the valuation we pay for the growth potential of any holding.
Stocks trade in various cycles depending upon current market participant expectations. We seek to add value by purchasing and selling stocks at what we perceive to be the appropriate price within that cycle. Our portfolio will remain concentrated so that we may maximize outperformance over the long term and so that the portfolio manager may focus on closely monitoring growth expectations and valuations for any stock in the portfolio. We are not wedded to one style box, and believe that being flexible, as well as disciplined, in different market environments will enhance performance over the long-run. Our fundamental stock research and valuation work drive investments, not an index.
Volatility in equity markets caused by short-term shifts in sentiment can create terrific opportunities to add value in the long-term. If a stock's fundamental earnings and cash flow outlook remain positive, but short term sentiment has affected the stock price in a negative way, we seek to add to positions. Likewise, if a stock's price appears to have moved ahead of our expectations for earnings and cash flow, we seek to trim positions. Our portfolios will remain concentrated in strong fundamental stock stories, but core positions will vary in size over time based on current prices and opportunities.
Lastly, a key element of our philosophy is to invest with the client. The portfolio manager(s) involved in performing research for and in managing the Hanoverian International Equity Product will at all times invest a significant amount of their net worth alongside the client portfolio.