The Australian Micro Caps market is a large and poorly researched investment universe. Of the over 800 stocks in the range of $10m to $300m market cap (what IFM Investors would broadly define as the Micro Caps universe), a minority have broker coverage. Our view is that there is a significant opportunity for professional investors to do fundamental research and gain an information advantage over the market.
The team’s investment philosophy is that the Australian Micro Caps market has a number of inefficiencies that create added value for disciplined, professional investors. We believe opportunities can arise in all sectors of the market, as well as across the value-growth style spectrum. Hence we manage a style-agnostic strategy and employ a focused, rigorous fundamental research to identify mispriced stocks in the investment universe combined with a systematic methodology to extract alpha while maintaining a low relative risk portfolio.
The team aims to exploit investment opportunities in micro caps through:
- Dynamic modelling of company financials with proprietary valuation techniques
- Qualitative assessment to systematically evaluate non-financial aspects of a business
- Meeting with company management to gain a better understanding of the business.