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Atlantic Investment Management

30 years of excellent returns with disciplined, focused value investing in public equities


Since 1992, Atlantic’s flagship Cambrian US equity strategy has made 4,271% net of fees, against 1,013% for the US equity market. Cambrian has annualised at 19% gross; the difference in net annualised returns is 16% versus 10% for the market. At half the market exposure, Atlantic’s hedge fund strategy has kept up with the S&P 500, annualising at around 10% since 1993. The gap in holdings is far greater. The six or seven stocks in Cambrian US would be just over 1% of the five hundred

S&P 500 stocks, but Atlantic casts its net wider than the S&P 500. Its Cambrian Global fund typically has 18 positions, well under 1% of the world equity universe. Atlantic filters its global investment universe down to about 1,400 mid-cap value stocks in specific industrial sectors (500 in the US, 300 in Europe, 250 in Japan and 350 in Asia ex-Japan), but only owns around fifty of them at any time, across all of its global and regional vehicles. Atlantic belongs to a rare breed of highly concentrated equity managers, but is distinguished, in addition to its exceptional long-term performance, from its few peers by a resolute commitment to liquidity.

Pictured Alex Roepers, Founder and Chief Investment Officer

In early 2018, Atlantic’s 30,000-foot view is that “despite the strong equity market run in 2017 and early 2018, overall equity market valuations have not reached the extremes seen during the internet bubble, but that a transition back to value stocks should occur,” says Founder and Chief Investment Officer, Alex Roepers. Valuations have become bifurcated between market leadership coming from richly valued technology stocks (including Facebook, Amazon, Netflix, Alphabet/Google, Microsoft, Apple, Nvidia) in the US and Baidu, Alibaba, Tencent in Asia, while much neglected value exists in some other sectors. The auto sector has its own valuation dislocations, with stocks, namely Tesla, feeding off the electric vehicles narrative commanding very high valuations while some auto suppliers’ share prices discount negative growth or even zero terminal value, according to Roepers. Broad indices of value stocks (such as the Russell 2000 Value) are full of traps for the unwary however, which is why the rigorous Atlantic process applies multiple stages of quantitative and qualitative filters and analysis to pinpoint its stock picks.

A global manager

Atlantic’s small number of holdings is not due to geographic restrictions. Atlantic’s main focus is the US, Canada, Western Europe, Japan, and Asia Pacific and select emerging markets in Asia. A global perspective, coming from around 500 company visits each year, helps to inform constructive dialogue with management around capital allocation, capital structure and messaging. For instance, Director of European and North American Equity Research, Kristian Gevert, can benchmark Japanese auto component makers’ revenues and R&D spending, when returning to his native Germany and visiting eight or nine companies a day, in cities such as Cologne, Dusseldorf, Leverkusen, Paderborn and Lippstadt. CFA charterholder Gevert, who joined Atlantic in 2006, formerly spent seven years on the sell-side after an MBA at New York’s Columbia Business School. Covering European industrials and capital goods at Credit Suisse, his research was twice top ranked by Institutional Investor.

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