Investment Strategy
Approach
We capture contrarian alpha from UK equities. We do this by using fundamental analysis coupled with catalyst-driven mean reversion investments.
The result is a concentrated and directional portfolio of hidden quality longs and forensic accounting shorts.
Our strategy aims to find mispriced UK equities and trade them as they pass back through their fundamental equilibrium over time.
We operate in the widening market gap between short-term quant-orientated traders and closet indexers.
Philosophy
We have a contrarian mindset. Emotions and investor sentiment move more than cashflows and business model changes.
We thrive on sifting through discarded, misunderstood and esoteric opportunities to find skewed risk-reward situations, often finding ‘hidden gems’ in unfashionable areas.
We believe this approach will endure, as human nature does not change.
Process
Our process can be summarised in three steps. We value a company, pay less for it and then trade the catalyst.
Value the Equity – Understand the company’s fundamentals and critical performance drivers.
Acquire at Discount – Preference to buy quality and to short frauds to the degree that the market offers at any one time.
Initiate Catalyst-Driven Position – The trade journey matches the investment thesis to maximise risk-return and helps avoid value traps.
Benefits for Investors
Access to one of the biggest and most liquid markets in the world.
Idiosyncratic, high return profile with low correlation to the pedestrian UK equity market.
A counterbalance to market fads and fashions.
Weekly liquidity, easy to value – for a fully regulated UK OEIC with no gate or hidden fees.
Commitment to keeping our capacity small to keep performance high.
How to Access the Kernow Strategy
(For Professional Investors Only)
Kernow manages investment capital on behalf of a range of investors, including institutional investors, family offices, private wealth groups and high-net-worth private investors.
We run a UK OEIC, the CG Kernow Equity Navigator Fund, an equity mandate for Norges Bank Investment Management, and several privately managed accounts.
Investors can access the strategy directly from us or via all high-quality platforms and wealth managers. Please get in touch with us if you would like to receive our monthly factsheet.