Asset management
De Pury Pictet Turrettini & Cie also manages securities portfolios for families and institutions.
Investment philosophy:
De Pury Pictet Turrettini & Cie seeks to identify companies which have the potential to create shareholder value over the medium and long terms. That potential can be estimated by:
- the earning power of current invested capital,
- an evaluation of competitive advantages that will provide a high level of profitability and a substantial contribution to growth,
- the difference between the company’s present and potential value on the basis of those factors (target value).
That philosophy has been successfully implemented since 1999 in very different financial and economic environments.
Equity investment process:
We use a bottom-up analysis which enables us to target the most attractive companies. Our investment universe is made up of the 400 largest European companies (normally with a market capitalization of over EUR 3 billion).
The first stage consists in identifying investment candidates by applying financial criteria such as return on equity (ROE), track record, future earnings and debt level.
In the second stage we subject the candidates to fundamental analysis:
- Analysis of return on invested capital (ROIC), ratio of debt to free cash flow and future earnings and dividend prospects.
- Analysis of competitive advantage based on the Michael Porter model, i.e. competition, potential new entrants, customers, suppliers and any substitution products. In that stage, we also have to make a decision on the quality of management and its strategy.
- Valuing the company and determining its target price on the basis of discounted cash flow or future dividend models.
- Optimizing the entry points into the portfolio by monitoring the company’s technicals and its likely future newsflow (earnings reports, etc.).
The third stage involves constructing the actual portfolio, generally with 25 to 40 stocks which have the potential to significantly outperform the market. We make sure that there is group diversification to limit the specific risks of sectors.
Investment process for mutual funds (long only):
- PPT seeks out managers which have a consistent, original (differentiated) and stable long-term approach
- We invest for the long term with managers which we identify and consider as sustainably outperforming, i.e. there is little fund rotation
- Those managers must have a track record of outperforming in the different market cycles
- We develop long-term relationships with those managers and regularly monitor their performances by talking and meeting with them
- Although our approach does have a quantitative aspect, we favor qualitative analysis in our selection process.