Conduit is a long-term shareholder in a select group of listed companies. Although we focus on insurance businesses, we concurrently invest in non-insurance businesses to bolster our capital base and, through earnings diversification, allows our insurance operations to focus on profitable growth.
Our investment objective is to identify, understand and invest in companies meeting two broad criteria:
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The company must be available at a price that represents a significant discount to our conservative estimate of fair market value. |
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There must be a confluence of business factors, centred primarily on the competitive advantage of the business model, which allows the company to increase its underlying intrinsic value at a high rate over time. |
In deciding on companies in which to invest, we spend significant time understanding the business, researching its competitive advantage and getting to know management. We primarily seek out four key attributes:
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The company must have a competent and energised management team. |
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The business must demonstrate a robust competitive advantage that will enable it to maintain and grow its economic position over time. |
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The company must have a clear path, over the next 10 or more years, to produce and compound long-term growth in intrinsic value. |
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While many companies may tick the three preceding boxes, even a great business can be a bad investment at the wrong price. We therefore have the patience and discipline to wait for the right company at the right price. |
Recognising that business value and market price can diverge for long periods of time, we take a disciplined and patient approach to realising value.
At this stage of Conduit Capital’s evolution, we are not necessarily concerned that Conduit’s net income after tax may be lumpy. Stock prices are inherently volatile and market behaviour is not always rational. Growth in net asset value per share is a better proxy for the performance of Conduit’s underlying business value.