Ivory approaches public market investing by assessing companies on a private market, or fundamental value, basis through a research-intensive, bottom-up approach. Ivory leverages its investment team’s experience in the investment banking and private equity industries to identify and assess the fundamental aspects that underlie prospective investment opportunities. With a solid understanding of these fundamentals, the team seeks to invest in those opportunities where a divergence exists between market values and underlying fundamental values.
Ivory’s investment team develops its own set of expectations based on proprietary research and analysis and contrasts these with consensus expectations to identify investment opportunities created by material misperceptions in the markets. For Ivory, an investment thesis must be quantifiable and data driven, while the pricing dislocation must be expected to correct (or converge to its fundamental value) within a reasonable time frame. Ivory believes this security selection process must be augmented and balanced at the portfolio level by managing exposure to macro and systematic risks. In doing so, Ivory applies its unique, systematic risk management approach to measure, monitor and limit unintended or unexpected correlations in the portfolio.
Ivory takes a fundamental value approach to security selection. Ivory defines fundamental value as the “price at which a company’s cash flows or asset values provide an adequate, risk-adjusted cash-on-cash return.” This approach is based on the belief that:
- Over time, securities trade at their fundamental value
- Short-term dislocations can cause market values to vary from fundamental values
- Investment opportunities are created by these misperceptions
- Intense focus and analysis of individual securities can uncover these opportunities