WertArt Investment Process


1. Idea generation
We have a watch list of companies which we have been following. Much of the investment process has already been completed concerning these companies. So we can act fast on new information and/or changes in the market price of these companies. We also obtain investment ideas through industry analysis (competitors, suppliers and industry clients are all possible investments), from other investors and from the media.

 

2. Due Diligence

The analysis of a company involves a checklist, that is evolvoing over time and includes qualitative and quantitative criteria. For instance, management's capital allocation skills, a management compensation that is aligned with the interest of minority shareholders, strong cash conversion, or a recurring revenue profile  are atributes of a company that define its degree of quality and the margin of safety required.

 

The objective of the due diligence is to identify and understand the key operating performance drivers and the key risks of the company. If an investment case is too hard to assess, we will pass and look at the next potential investment.

 

3. Valuation

The valuation is about forcasting the company's future cash flows. Given the uncertainty inherent to investing, we will model different likely scenarios. The range of outcomes and the probabilty assigned to each scenario indicates whether we can invest with a margin of safety. The overall objective in the valuation process is to keep it simple and use common sense. Companies that fullfill the investment criteria but where the price is too high will be added to the watchlist.

 

4. Record keeping

We lay out investment thesis in writing. It is important to have the research and decision making process well documented. We will use the original thesis to continously monitor the real life progress of the investment.

 

5. Monitoring

After a positive investment decision has been made and the company has been added to the portfolio, We will regularly monitor the investment progress  (at least quartely and when new information is released).

 

6. Sell decision

A company will be removed from the portfolio,(i) when the market price reaches the intrinsic value, (ii) new information suggests that the initial investment thesis was too optimisitc (iii) the portfolio company can be substituted by a more attractive investment opportunity.

 

7. Post-Mortem analysis

After selling the investment, we prepare a post mortem analysis that focuses on the lessons learned from the investment. We include these lessons in the checklist to continously improve the investment process. If the company's business model has prevailed its attractiveness, the company will return on my watchlist as a potential investment in the future at a more attractive price.

 

 

WertArt Portfolio Management


The average investment horizon is 3 to 5 years. The portfolio consists of 25 to 30 listed companies. Each company has a significant impact on the portfolio with an initial weight of approx. 2%. The initial weight can be increased up to 4% of the portfolio. The maximum weight of each position in the portfolio is 10%. The portfolio is not limited by country, sector, size or tracking error limits.