Capital Account

Special Situation and Value Based Investing Opportunities

Home

Our Approach

Capital Account's approach to idea generation entails spending 100% of our time focusing on opportunities that fit within our predefined investing parameters.  In our 20+ years of global investing we have determined that concentrating our efforts accordingly provides us with the greatest opportunity to generate strong absolute returns, without placing our capital at undue levels of risk.  Our approach is by no means for everyone, in fact we constantly seek out the contrarian element of our reseach, which remains the ultimate test as to whether a stock is capital worthy.  We have so-named our model portfolio "Contrarian Opportunities" to capture the essence of this approach. 

With the average holding period of the largest traded companies in America today less than six months, and great swathes of the market in Japan and Europe underfollowed, we can profit handsomely by focusing our investment lens a little further into the future in assessing new opportunities.  Our reports are aimed at highlighting ideas where investors can allocate capital to businesses trading significantly below their intrinsic value, are long-lived in nature, and importantly carry relatively low risk of loss compared with potential reward.  Our starting point though is not the broad market, but a subset of securities where the greatest potential for arbitrage exists.  Our ideas will have one or a combination of the following characteristics:

  • Shares trading cheap relative to cyclically adjusted valuation metrics (limited downside versus strong cyclical upside)
  • Spin-offs and demergers (potential to unlock value)
  • Businesses emerging from bankruptcy (typically neglected shares)
  • Management changes (catalyst to unlock value)
  • Insider purchases, tender offers and significant capital returns (statements of value)
  • Market dislocation events (forced and/or panic selling)
  • Companies with little or no sell-side coverage (neglected opportunities)
  • Owner-managed businesses (managed for the long run)

The categories above are simply our way of parsing the hundreds of opportunities that are put in front of investors each day.  A stock fitting one of these categories guarantee's nothing of course, for instance not all spin-off's are created equal, there is a wide range of owner-managed businesses, and so-called cyclically cheap stocks require some degree of subjective assessment.  It is our view however, that the hit rate of winning investments will be significantly higher by committing to this approach versus a random trawl through markets. 

Our Audience

We believe our approach to idea generation and analytical framework provides subscribers with rigorous, timely and actionable ideas similar to that of an experienced in-house analyst, but at a fraction of the cost.  Our research service is aimed at sophisticated private investors, family offices, small institutions, endowments and similarly sized organizations.  Our analysis spans the major developed markets where we can get access to historical financial data, English language reporting and where standards of governance and financial transparency are generally high. 

Complementing our monthly work are irregular blog postings on broader investing themes, often providing the drum beat by which markets operate. 

We welcome all feedback on both the site and individual ideas at
contact@capital-account.com

Website Builder