Identifying mispriced risk and managing it requires a different perspective.
One must understand the mainstream but not get pulled along by it. We adopt a three-stage, iterative approach:
- Monitor the larger context ― understand the political and macro-economic trends at work in each country and among them. Ask: How will this affect investors' perceptions and the ability to realize full value in a business?
- Track the operations of all relevant businesses ― understand the micro-economic trends at the company level. Continually process a comprehensive data base of the full financials for thousands of companies through proprietary models. Build the forest up, tree by tree. Ask: How does each company's operating value compare with its financial valuation?
- Define the path of interaction ― understand how all the parts of the system work together and how the structure of the market is changing, and why. Ask: How are the rules of the local game changing?