Small Cap Absolute Value Strategy

Investment Approach

At the heart of the strategy’s philosophy is the belief that the Japan small cap market is not efficiently priced due to the relative lack of coverage by asset managers. There are too many companies in the investible universe that are under-researched, with little or no coverage. Consequently, the small cap universe provides numerous opportunities for active managers to find mispriced stocks.

The portfolio manager has a disciplined investment style where he focuses on PER –price to earnings ratio-, which we believe is the most effective indicator in Japanese small cap market. We typically hold a stock until the market notices and corrects the undervaluation. We can be patient because our extensive company research ensures stability and strength of fundamentals of invested companies.

We believe that the manager is currently unrivalled in terms of the volume of company research he has conducted during his career. He has met a few thousand companies in his career and counting, and continues to meet around 900 companies in a year now, providing an enviable knowledge bank of insights into the small cap market.

Key Strengths

Unrivalled Access:
Small cap markets are sparsely covered by analysts – We pride ourselves on having a deep understanding of the companies through our extensive research process and volume of meetings to uncover attractive companies at deep discounts to their intrinsic value.

Extensive Track Record:
The award winning portfolio manager has almost 30 years’ experience investing in the Japanese equities small cap sector delivering strong outperformance since inception. The strategy has been recognised with a number of industry awards.

Hidden Gems:
The strategy aims to identify unloved and neglected companies, relying on our research driven, bottom-up stock picking approach to unearth companies with true earnings potential and exploit the opportunities that exist within the Japanese small cap market.

Why Japan Equity Small Cap Absolute Value?

Award-winning portfolio manager: Having managed the strategy since inception, Tatsuro Nigauri has received prizes from the R&I Fund Contest (2012, 2013, 2014 and 2015), as well as the Lipper Fund Awards Japan (2012 and 2013) and J Money Fund Awards (2016). As a result, Mr Nigauri is well known by companies’ management in the sector and they will often make him their first call when organising investor relations trips, helping to free up time for Mr Nigauri and his team.

Distinctive Value-biased investment approach: By adopting a distinctive Value-biased investment approach and focusing on extensive research gleaned over the course of over two decades of research into small-cap Japanese equities, Mr Nigauri is able to unearth companies with true earnings potential and exploit opportunities that exist within the niche Japanese small-cap market.

Local expertise and native Japanese equity portfolio managers: Direct and easy access to an often opaque Japanese market gives us the ability to navigate the idiosyncrasies of the small and micro-cap market. Given how crucial assessment of company management is in this area, we feel this gives us an advantage over our competitors