JVSakk Group

To gauge our performance, at JVSakk we use both mainstream indices & also a custom benchmark.

Mainstream Indices:

MSCI indices & HSI Composite Index

Proprietary Benchmark:

We measure our fund’s performance against our proprietary benchmarks which commensurate with the fund’s investment universe.

We identify our investment universe and classify investment styles by using factor modelling. This allows us a number of advantages over traditional mainstream indices:

• Valuable in monitoring & refining the investment process that allows us to systematical narrow down of general characteristics of stocks for us to further spot, modify and implement our investment strategies
• Paralleled alignment with parameters used in our investment process and most representative of our research universe & investment style
• Construct most valid benchmarks that cohere with the manager’s investment approach
• An unbiased way to describe manager’s investment approach (i.e. Overweight Large-Cap value / Underweight Small-Cap growth)
• Transparent benchmark construction methodology to investors

JVSakk bravely assumes that for the most part, share prices reflect the discounted value of expected future cash flows.

However we also assume that there are enough over optimistic or pessimistic investors to systematically but temporarily bias the prices of individual stocks away from fundamental value.

Our investment objective is build upon the above beliefs in order to exploit mispricing and anomalies to deliver sustainable capital appreciation for investors in emerging markets.

Alpha Thesis

At JVSakk, we believe the followings:

• The market is far from efficient
• In a perfect market, share price should reflect the discounted value of expected future cash flows
• In real life however, many stocks are priced away from their true worth

We have a medium to long term investment horizon by adopting a buy-and-hold policy with stringent profit taking and selling / hedging discipline. We aim to optimize upside potential / downside protection for investor with minimum transaction costs.

Contrarian Value Investment Style

We adopt contrarian value investment style that tends to lag during periods of great stock market buoyancy, and to outperform when the stock market shows low or negative returns.

Intrinsic and Overlooked Value

Going against the consensus is part of our philosophy, but not the whole story. To establish a position in an investment, we must be convinced that there is intrinsic and overlooked value.

Keep Capital Invested

Only by staying invested over the long term can investors portfolios participate in the increased valuation of equities over time.

Patience Investor

Our criterion in going into a position – in addition to low downside risk – is the opportunity to double investors money (at least) over 12 to 24 months period. As long as such potential remains, even if the stock has already appreciated significantly, we will continue to hold the position.

Comprehensive Research

Our portfolio turnover tends to be low, far from being a sign of inactivity, indicates the significant research we do on the target companies and the high comfort level that developed when we know a company well.

We continuously monitor portfolio performance to evolve investment process and equities selection technique, utilizing proprietary benchmarks to gauge active investment performance and facilitate performance attribution to improve ‘true Alpha’. In addition to monitoring tracking error, JVSakk employs a security-level performance attribution model that reflects and evaluate the firm's investment decision process.

• Systematically identify and exploit price discrepancies caused by human bias such as over optimism or pessimism.
• Overweight stocks with high ratings and underweight stocks with low ratings while minimizing risk to create our portfolio.
• We take a long term view on investments and believe that over time, companies which are mispriced will be back to equilibrium. We seek to invest in enterprises that can have strong competitive edges which are substantially underpriced.
• Thorough on-going qualitative research and investigation along with meticulously implementing our proprietary pricing models will help reveal the intrinsic values of the stocks.
• As a mispriced stock could stay in inequilibrium for a long time, market timing is also incorporated as a pivotal process when using our proprietary price efficiency analysis.
• We continuously evaluate, test and refine our investment process to enhance risk adjusted Alpha.

Buy Discipline

We employ a combination of top-down and bottom-up approaches to determine holdings of the portfolio in order to maximize performance:

• Top-down fundamental analysis to quantitatively examine macro factors such as political events, trade policies, interest rate movements, and monetary and fiscal policies to determine relative values of various equities.
• Bottom-up stock selection based on intensive proprietary research and disciplined, rigorous investment process.

Sell Discipline

A price increase in a stock is not reason enough to sell.  We particularly sell stocks when :

• A company's earnings potential has run its course,
• The company has been embraced by the investment community to such an extent that the potential for favorable surprises has been priced into the stock,
• We deem them to be mistakes,
• Sell for portfolio reasons. Not comfortable holding disproportionate large positions in a portfolio, no matter how attractive a company's prospect is. Out-sized positions represents too much risk in the event that the company stumbles,
• Trimming large positions in equities on the way up as an investment matures.

Risk Management

We strongly believe that good risk management and internal control is a critical component of our business and forms the foundation for a safe, sound and sustainable business. More importantly, a strong and effective system of internal procedures and control will help to ensure that the goals, needs and objectives of our clients are met.