At Flagship we follow a long-term, valuation-based investment philosophy. We value shares as a business owner would, looking at the quality of the business as well as the key drivers of profitability and risks inherent in the business. We only invest in shares when our research leads us to believe they are priced below their fair value, and we sell them when they reach fair value.
We only invest in businesses we consider high quality. We invest with a long-term time horizon, and our portfolio turnover is low. Our portfolios will not look anything like the indices against which they are benchmarked.
Responsible Investing
Flagship invests in a concentrated selection of high quality businesses with sustainable runways for growth. ESG considerations are integral to our investment process.
Key Characteristics of our Philosophy
- Thinking like business owners. When we value shares, we think like business owners. We place ourselves in the shoes of someone being offered a stake in the whole business, and value the shares in the business from that point of view.
- Thinking long-term. We are long-term shareholders. When we make an investment, we take a 5 to 10-year view. We are able to generate our returns by taking advantage of the short termism of the market, generally expressed as excessive pessimism or optimism.
- Embracing a ‘margin of safety’. We understand that our investment returns are determined by the price we buy at, not the price we sell at. We will only buy a business at a significant discount to its intrinsic value. This protects us from unforeseen risks in our investment cases, as well as from the risk of capital loss when overpaying.
- Understanding the impact of noise. We seek to understand and focus on what matters and adds value to our investment cases while eschewing short term news flow that seeks to extrapolate or sensationalise current trends.
- Avoiding loss through active risk management. We understand that risk and return are two sides of the same coin. Our risk management takes place at the individual stock level and at the portfolio level. We focus on understanding and accepting appropriate portfolio risk without sacrificing our ability to generate positive returns.
Risk Management in our Investment Process
At Flagship we embrace a risk management framework that seeks to identify potentially challenging market environments and sources of intended and unintended risk in the portfolio.
Our risk management begins at security selection, where we mitigate risks by investing in high quality businesses that we buy at prices that offer us a margin of safety to their fair value. We focus on understanding and evaluating of downside risk on every security in the portfolio.
We furthermore reduce risk through portfolio diversification, currency diversification, position size targets and liquidity thresholds.
What you can expect from us
At Flagship our equity portfolios (as well as the equity portion of our multi-asset portfolios) will contain a small number of high conviction positions about which we have a deep understanding. Our portfolios will typically not adhere to index weights and positioning, and they will have modest turnover which is consistent with our long-term investment approach.
In our multi-asset portfolios, we will value other asset classes with primary reference to the attractiveness of equities as an asset class. The flexible funds that we offer are ‘growth centric’ and will typically hold the majority of the net asset value of the fund in equities except for times of extreme dislocation in asset prices.
We may hold views in our equity portfolios, or in our asset allocation portfolios, that are contrarian or out of favour with current market thinking. Our portfolios will typically not look anything like the indexes they are benchmarked against.
We understand that businesses, consumers, and technology change and adapt, and should they change meaningfully in one of our investment cases we will adjust our views.
What we can do for you
At Flagship we offer a high-touch service and a high-quality investment approach. We are professional but also approachable. We embrace the principle of simplicity, efficiency and reducing complexity to make sure our team is always looking for ways to find you more.
