Investment Process

In applying bottom-up stock selection, the Investment Manager considers the following characteristics essential to the companies it selects:

  • Predictability
    Invest only in companies that have business models the Investment Manager understands, and where drivers of earnings growth can be identified.
  • Sustainable Business Franchise
    Invest in businesses that have an economic moat e.g. brand, scale economies, key technologies, etc.
  • Sustainable Cash generation
    True economic value arises only when companies generate a cash flow return on capital that is higher than their cost of capital over a sustained period of time.
  • Strong Balance Sheet
    Invest only in companies that demonstrate balance sheet strength. A strong financial position minimizes business risk and enables sustainable growth.
  • High Quality Management
    Management are stewards of investors’ capital. Duxton Capital strives to identify management teams with track record of good corporate governance and of value creation.

Duxton Capital believes that these factors, when combined, allow for the sustainability of earnings growth and the creation of shareholder value over the long-term.

Stock Analysis and Due Diligence

The Investment Manager carries out rigorous and extensive research and due diligence on the stocks Duxton Capital invest in. This includes, but not limited to:

Company site visits

Management interviews

Upstream and downstream channel checks

Development of comprehensive financial and valuation models

PORTFOLIO CONSTRUCTION GUIDELINES

Base Currency

USD (VND unhedged)

Holdings

15 to 30 holdings

Maximum position size (at market)

15% absolute

Minimum position size (at cost)

1% absolute

Sector limits

No strict limits, but kept no more than +/-20% of index weight

Cash

<5%