We believe that inherently inefficient short-term market pricing creates opportunity to invest capital for attractive long-term returns.
Global Value Investment Corp. subscribes to value-oriented investment principals rooted in rigorous fundamental research an analysis. Our mandate is broad and flexible, unconstrained by criteria such as style, market capitalization, industry, or geography.
Equity Investments: We approach equity investments as fractional ownership interests in underlying businesses. As business owners interested in the long-term financial and operational viability of an enterprise, we analyze both the historical performance of the business and future expectations to formulate an informed appraisal of intrinsic value.
Debt Investments: Corporate debt securities are views as contractual claims on the earnings and assets of a business. We seek investment returns both from regular interest payments and appreciation of mispriced debt securities, seeking investments in companies with strong balance sheet characteristics and attractive interest coverage ratios.
Special Situations and Alternative Investments: We may deploy capital opportunistically when long-term value creation necessitates operational or strategic changes that current management and directors are unable to effect. We adhere to strict requirements for expected investment returns and carefully weight risk when committing capital. If attractive investment opportunities are not available, we strategically hold cash and cash equivalents to maintain flexibility to quickly react to market developments.
Investment Philosophy
Our investment discipline revolves around six key tenets:
- Appraised Value: Rigorous quantitative and qualitative analysis goes into approximating an investment’s appraised value.
- Economic Moat: We require any potential investment to possess sound fundamental financial characteristics such that the economics of the business are sufficiently insulated.
- Raison d’être: The issuer of securities in which we invest must have a clear reason to exist. Appreciation of a raison d’être often comes only after understanding the entirety of the enterprise as a going concern.
- Margin of Safety: Preservation of capital and an acute awareness of the possibility of uncertain future outcomes is of paramount importance when assuming investment risk. Our investment theses consider expected outcomes, but a margin of safety exists only when capital is preserved in the event of an unfavorable outcome.
- Management Evaluation: We invest in businesses run by experienced and effective managers, but we have also observed that management transitions create an opening for a underperforming business to achieve superior performance, enabling us to take advantage of such situations.
- Clear Catalyst: A catalyst causes the gap between price and value to narrow or disappear altogether. When evaluating an investment, we consider numerous catalytic events of varying likelihood. When appropriate, we are willing to assume the role of an operational activist to create a catalyst.
Investment Process
Global Value Investment Corp.’s investment process involves seven critical steps:
Idea Generation: Global Value Investment Corp. exercises an unconstrained investment mandate. Potential investments are identified using a variety of sources.
Initial Criteria: Initially, we consider broad criteria before beginning the analytical process in earnest, including adherence to financial reporting standards, management accessibility, and transactability.
Refinement: Hundreds of potential investments meet our initial criteria. We narrow this list based on several quantitative and qualitative characteristics, resulting in a much smaller group of equity and debt securities.
Fundamental Analysis: Historical financial results are gathered from publicly available documents and supplemented with quantitative and qualitative data points. Consideration is given to macroeconomic and industry conditions. During this step, we also begin our evaluation of management and corporate governance.
Investment Decision: If the security meets our return expectations, the investment committee memorializes our assessment in a comprehensive written investment thesis that details the findings of our analysis and our investment expectations.
Continuous Review, Update, and Analysis: Investment research is a process that continues throughout the term of an investment. As new information becomes available, it is incorporated into our evolving analysis.
Sell Discipline: Investments are sold when our appraised value is achieved or the investment thesis breaks down.