The key investment objectives of Marlin are to:
The investment philosophy of the Manager, Fisher Funds, is summarised by the following broad principles:
Fisher Funds employs an investment analysis model that it calls STEEPP to analyse existing and new portfolio companies. This analysis gives each company a score against a number of criteria that Fisher Funds believes need to be present in a successful portfolio company. All companies are then ranked according to their STEEPP score, to broadly determine their portfolio weighting (or indeed whether they make the grade to be a portfolio company in the first place).
Strength of the Business
What is the company’s competitive advantage? Is it sustainable? Is the company a market leader? Does it have a dominant position? A strong business is one that can maintain its profit margins by employing a unique strategy.
How has the company performed in the past? Has the company performed under the same management team? Has it grown organically or by acquisition? How did the company react during a downturn? Fisher Funds prefers to buy established companies that have executed well in the past.
How fast has the company been able to grow its earnings in the past? How consistent has earnings growth been? Fisher Funds prefers to buy companies that exhibit secular growth characteristics where the company has proven its ability to provide a high or improving return on invested capital.
Earnings Growth Forecast
What is the company’s earnings growth forecast over the next three to five years? What is the probability of achieving the forecast? What does Fisher Funds’ expect the company’s earnings potential to be? Fisher Funds notices that too many analysts focus on short-term earnings. As long-term growth investors, Fisher Funds thinks about where the company’s earnings could be in three to five years.
Who are the management team and how long have they been in their roles? Who are the directors, what is their history with the company, and what do they bring to the Board? What is the depth of management in the organisation and is there a succession plan for the key executive roles? Do the management team own shares in the business and how are they rewarded? Has the Board and management exhibited good corporate behaviour in the areas of environmental, social and governance considerations? For Fisher Funds, the quality of the company management and its corporate governance is of paramount importance.
How much of the future earnings growth is already reflected in the share price? Where does the current share price sit in relation to Fisher Funds’ worst to best case valuation range? A company will generate a higher score where the market price currently reflects little of that company’s upside potential.