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Investment Approach

INVESTMENT PHILOSOPHY

We believe investment is simple but not easy and this is reflective of our 

Investment Philosophy which is based on our three pillars of investment.


 

MARGIN OF SAFETY 

We analyse two aspects:

  • Valuation margin of safety - defined by the discount of the company valuation versus its own long term average valuation.
  • Operational Margin of Safety - companies which have consistently produced high returns with a moat or barriers to entry.

ATTRACTIVE VALUATIONS 

We assess the returns our companies have made in the past; determine whether these returns can continue and ascertain whether the market is offering an attractive valuation.


 

STRONG CASH FLOWS

We like cash generative companies which are able to reinvest in the business at high rates of return. 

Quality companies put less capital at risk to generate a given level of profits.


We define the quality of a company on the following characteristics:

  • Return on capital employed
  • Return on equity
  • Operating profit margins
  • Levels of debt or leverage
  • Cash conversion
  • Free cash flow yield
  • Management

 

 

 

 

 

 

 

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Castlebay Investment Partners LLP is authorised and regulated by the Financial Conduct Authority (624445)
Registered Office: Crosstrees House, 14 Sandyford Place, Glasgow  G3 7NB  Tel: 0141 212 7930
Castlebay Investment Partners LLP is a Scottish Registered Limited Liability Partnership SO304149

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