Magellan High Conviction Trust (ASX:MHH)

Hamish Douglass
Portfolio Manager
Market Cap (AUD): 938.99M
Sector: Financials
Last Trade (AUD): 1.495 -0.03 (-2.29%)
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1. About

Magellan High Conviction Trust (ASX:MHH) aims to achieve attractive risk-adjusted returns over the medium to long-term through investment in a concentrated portfolio (8-12 securities) of high-quality companies.

Investment philosophy

The Magellan High Conviction Trust seeks to invest in outstanding companies at attractive prices, while exercising a deep understanding of the macroeconomic environment to manage investment risk.

Magellan perceives outstanding companies to be those that are able to sustainably exploit competitive advantages in order to continually earn returns on capital that are materially in excess of their cost of capital.

While Magellan is extremely focused on fundamental business value, it is not a typical 'value' investor. The Magellan High Conviction Trust will invest in companies that have relatively high price-to-earnings and price-to-book multiples, provided that their businesses are outstanding and their shares are trading at an appropriate discount to their assessed intrinsic value. Equities that appear undervalued on the basis of a low price-to-earnings or price-to-book multiples will often prove to be poor investments if the underlying business is fundamentally weak and exhibits poor returns on capital.

Magellan focuses on risk-adjusted returns, rather than benchmark-relative returns. As a result, the Magellan High Conviction Trust investment process is designed to generate an unconstrained, highly-concentrated portfolio of high-quality companies.

The Magellan High Conviction Trust will comprise of 8 to 12 investments, with the portfolio weighted towards Magellan's highest-conviction ideas. The Fund may also hedge some, or all, of the capital component of its foreign currency exposure arising from investments in overseas markets back to Australian dollars.

2. Business model

3. Strategy

4. Markets

5. Competition

6. History

7. Team

8. Financials

9. Risk