INVESTMENT
PHILOSOPHY

Macro Is the Aggregate of Micro.

We have incorporated SPARX Group’s investment philosophy and fine-tuned in every aspect of our business. It is the essence of what we do day in, day out, and fundamental to all our professionals.
Our analysts employ a bottom-up approach to dive deep when investigating businesses with management interviews, on-site. This is often conducted in parallel with our quantitative analysis on company’s financials in pursuit of its true intrinsic value. Findings are then internally scrutinized by every member of the investment team to ensure that no stone went unturned. As true bottom-up investment professionals, we seek long-term stable returns by taking significant stakes in businesses with a proven track record as we strive to meet our targeted returns for investors.

Bottom-up research

This investment bottom-up research process is applied throughout
SPARX Group for all strategies and asset classes.

  1. STEP 1

    Intrinsic value of a company is identified by measuring a company’s quality of earnings, market growth potential, and management strategy.

  2. STEP 2

    Investment opportunity is identified if value gap between the intrinsic value and the market value of the company exist. For any investment opportunities, value gap is first identified to ensure margin of safety. Often, the magnitude of the spread between the intrinsic value and market value of a company (or the company’s perceived value) can mislead investors to believe that the greater the value gap (when the intrinsic value is greater than the market value), the stronger the investment candidate.

  3. STEP 3

    Determining the investment taking into consideration the catalog that fills the value gap. Catalyst (trigger, factor): A catalyst and factor that encourages the process of converging the stock price to the intrinsic value (solution of the value gap) is called a catalog. It is another important factor when conducting company survey.

    Example of Catalyst
    There are external factors such as deregulation and changes in accounting system, but internal factors such as changes in corporate governance can also be an important catalyst.

Long-term earnings forecast

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