The strategy’s philosophy is best described as a combination of strategic and contrarian thinking.

The strategic element comes from a perceived opportunity in large cap stocks versus mid and smaller caps. This is predicated on the view that small cap outperformance is unsustainable and that the valuation advantage formerly enjoyed by the latter has unwound.

The contrarian element is based on the principle that cyclicality strongly influences every sector of the Japanese market, and that outperformance can be generated by exploiting extremes of valuation. This means buying stocks that are completely unloved, and selling them when they become popular (after significant price appreciation). Great care is taken in stock selection and any change of view is subject to extremely serious consideration.

The team focuses its attention on judging the quality of businesses, basing assessments on what has been achieved historically and what can potentially be determined about the future from the prevailing environment. Identifying significant differences in relative valuation and a strict adherence to contrarian principles have historically proved to be both a potent source of alpha and a key competitive advantage.