Investment Philosophy

 
 

 

A defining characteristic of publicly listed firms is the separation of ownership and management of corporate assets, which gives rise to potential conflicts of interest.  For instance, in undertaking a debt or equity funded large acquisition, a CEO might engage in empire building that is value destructive for shareholders.  Corporate governance researchers and practitioners have sought to develop remuneration and board structures, designed to align the interests of senior management with those of the ultimate owners, shareholders.

Within the universe of publicly listed firms lies a small subset which are run and/or overseen by company founders. Founders bring a single minded focus, long-term vision, entrepreneurship, and a commitment to build wealth for shareholders over the long-run. Importantly, the active involvement of founders helps to address the principal-agent problem, because the founder runs and/or oversees the firm that they own.  This creates a powerful alignment of interests that formal corporate governance structures aspire to, but rarely achieve.

In addition to having skin in the game, founders are typically disrupters who run their firm as their life passion rather than as a career stepping stone.  Our global research has shown that founder companies in developed markets deliver strong operating performance and higher risk adjusted returns than non-founder firms.

To our knowledge, Global Founders Funds Management (GFFM) offers the only investment strategy of its kind to invest exclusively in internationally listed founder companies.  We have identified over 250 founder stocks in developed markets.  A concentrated portfolio of up to 30 stocks is constructed based on a range of market capitalisation, quality and valuation criteria, which are designed to focus the portfolio on liquid stocks that have high expected returns.  Our product represents an active investment strategy that uses our proprietary systematic portfolio construction process, which means that we don't rely on a large team of analysts or portfolio managers.  This enables us to maintain low fees and deliver higher after cost returns to our SMA holders.

Consistent with the founder principle that underpins its investment philosophy, GFFM's investment team achieves a powerful alignment of interests with clients by investing a material portion of their net worth in the Separately Managed Account (SMA) model portfolio.  GFFM is majority owned by management and is therefore not influenced by a dominant equity owner.