It is important to have a good investment process and I am constantly checking how other investors approach this. Arisaig is a consumer focused fund and I admire the in-depth work they do in understanding their companies. Below is how they summarize their investment process in their letters. I don’t agree with every point but most of what they say is very sensible.
What we look for in our stocks:
– Market leadership – dominant companies tend to do better;
– Scalability – large target markets;
– Strong “moats” – brands, distribution, innovation;
– Low capital intensity – high ROCE;
– Predictability – compounding growth;
– Access – management who welcome our involvement.
What our investors can expect from us:
– Alignment of interests – capped funds, no segregated portfolios, co‐investment;
– Transparency – holdings booklets, monthly portfolio summaries, examples of research reports;
– Coverage – 22 analysts; five research offices; 150 target stocks;
– Minimal trading – active management destroys value;
– Focus – consumer companies tend to out‐perform, so we won’t be doing anything else.