Our Philosophy

Solventis EOS SICAV follows a value investing philosophy, promoted by managers like Benjamin Graham (1894-1976), Warren Buffett or Peter Lynch. The basic pillars of this approach are:

  1. Search for understandable business and long-term vision.
  2. Search for business whose market price is less than its intrinsic value. The difference between value and price is the Margin of Safety.
  3. Preferably with history, with attractive returns, generating cash and little debt.
  4. Companies that can defend their competitive advantage.
  5. Ran by honest & competent people, whose interests are aligned with those of the shareholders and, above all, who value human capital.


“Sound Balance Sheets, Sustainable Competitive Advantage, Attractive Returns, and last, but not least, alignment of managers’ and investors’ interests”

As managers, we try to create a portfolio following those pillars, which, together with a good diversification, will allow us to obtain a higher stability facing the market volatilities. We search for businesses attractive in:

  • Valuation

    - About understandable businesses
    - With high and constant ROCE, ROE, Margins, Free Cash Flow Yield
    - High ROCE > Cost of Capital
    - With growing Ebitda/Ebit

  • Solvency

    - Good Net Debt / Ebitda Ratio
    - High Ebit /Financial Expenses
    - Low Debt/ Stock-market Capitalization
    - With low tension between CDS 1-5 years

  • Stability / Liquidity

    - Generating Cash
    - With minimum contracting volumes

The basic steps of value investment methodology are the following:

  • Selecting investments without any conflicts of interest.
    Given the lack of any financial links with listed companies, our investment selection is totally independent. And our service is strictly a management service. As a result, our investment selection is focused on achieving maximum returns for our clients.
     
  • Investing in companies that we understand.
    Our investment model is geared towards selecting companies whose businesses we can fully understand. It is true that in many cases this may mean excluding companies or sectors with huge potential returns; however, we believe the investment process needs to be developed over long periods of time, and that opportunities in uncovered areas only arise very occasionally (e.g. the technology boom at the end of the 90s) and may not be a lasting proposition.
     
  • Investing in companies with solid track records and sustainable long-term growth.
    That is to say, we are looking for companies whose operating performance is a reality and not a promise. This means that we will normally avoid investing in companies undergoing major strategic changes on the basis that these are normally introduced following the failure of a previous strategy. In short, we invest in companies that are profitable in their own right.

  • Investing in companies that have efficient, motivated and solid senior management.
    Generally speaking, it is our view that the value of a company is closely linked to the quality of its senior management. This is very important; not only in terms of their capacity as managers, but with regards to their capacity to generate value for shareholders. So, it is important to monitor closely a number of factors: for example, that the company's growth is not limiting shareholders' returns, as these results in a loss of value in the long term.
     
  • Applying an objective valuation methodology.
    We focus on the fundamental analysis of the company by carrying out a meticulous study based on the publishing of its accounts, the study of the company’s competence, suppliers, regulation and tendencies. We try to establish a direct dialogue with the company itself as a detailed trimestral tracking about its results, when possible.
     
  • Diversifying.
    Experience has shown us that the classic levels of diversification are insufficient in current markets. For this reason, we build portfolios with a large number of stocks, and limits for stock, sector, and country exposure.
     
  • Being flexible in the percentage of Investment.
    Not all ideas represent the same level of adaptation to the risk desired in the portfolio as represented by the conviction degree. In this respect, we are flexible with the percentage that each value represents in the portfolio, both at the time of entry and in the disinvestment process.