Whitefield aims to provide investors with long term capital growth and a reliable and growing stream of franked dividends from investment in a professionally managed, diversified portfolio of industrial shares listed on the Australian Stock Exchange.
Whitefield seeks to own a portfolio of attractively priced, high-quality businesses with a proven or strengthening ability to deliver shareholder value.
We utilise a disciplined quantitative and qualitative process to identify and assess Quality, Intrinsic Value and Mispricing, and seek to invest where each of these important elements are developing favourably for our investors.
Our Style Neutral approach is designed to provide a diversified return despite our industrials-only focus. (Our portfolio does not invest in the resource sector).
The quality of a business is fundamentally important to an investor.
Over the long term businesses benefitting from favourable or improving industry structures, competitive position, management application and longer term economic trends have a propensity to generate higher returns on investment than companies that are not. A company’s relative ability to generate shareholder value forms the basis for our definition of Quality which we measure and rank through our Structural Attractiveness Assessment.
Patterns of mispricing materially influence investment returns.
Mispricing occurs when share prices diverge from the intrinsic value of a company. The share market routinely misprices stocks, in some cases by large amounts and over extended periods, creating ongoing opportunities and risks for investors. There is much empirical evidence in the field of Human Behavioural Bias (HBB) which supports our view that the dominant causes of mispricing are the errors of judgment which are systematically made by the investment community.
Whitefield seeks to classify stocks in terms of the scale of mispricing and how it is likely to develop in future through our Price-to-Value Cycle Assessment. This assessment characterises companies through combinations of Value, Quality, Revisions and Momentum, and assists us in capitalising on the opportunities and avoiding the risks that result from mispricing.
Whitefield believes that consistent and successful investment outcomes can be provided with the greatest reliability through a defined and disciplined process.
Our investment process has five stages:
Raw Data Collection We utilise a range of data sources across a variety of subject matter including historical company financials, broker forecasts and revisions, economic data, raw materials data and market data.
Proprietary Stock Models Our proprietary stock models combine proprietary valuation inputs and assumptions with consensus data in a manner designed to minimise our own judgment biases through the accurate assessment of long term drivers of shareholder value creation.
Data Processing Our customised analytical processes and measures utilise the raw data and stock model outputs, and have been designed to suit our ultimate purpose of assessing companies’ relative Quality and Intrinsic Value.
Stock Classification Based on the outputs of our data processing analysis, stocks in our coverage universe are assessed, ranked and allocated against our Structural Attractiveness (SA) and Price-to-Value-Cycle (PVC) criteria. These quantitative conclusions are qualitatively assessed by analysts and either confirmed or overruled based on a rigorous set of criteria designed to minimise the influence of our own judgment biases.
Portfolio Construction & Risk Management Whitefield’s portfolio is then constructed by the Portfolio Manager using the SA and PVC assessments and with reference to our overarching portfolio framework which utilises the most profitable and suitable combinations of SA and PVC classes in the light of our experience and process back-testing.
We also embrace a philosophy of continuous process enhancement to ensure that our methodology is best able to satisfy our objectives in the light of technological advancements and changes in the market environment. Our process of continual enhancement draws upon the experience of our investment personnel, an active process of methodology research and review and rigorous empirical testing of enhancements prior to implementation.