Systematic Fundamental Investing

/Systematic Fundamental Investing
Systematic Fundamental Investing

We believe that the daily prices of individual stocks are informed by, but not constrained to, their long-run fundamental values. Because short term prices can reflect capricious investor sentiment, systematic investing based on sound fundamentals will generate consistently higher average returns. Our strategies are designed to identify firms with solid fundamentals trading at reasonable prices, and to avoid firms with contrary features.

We begin with a simple economic question: “What drives stock returns?” We believe firm level returns are a function of current and future fundamentals (as measured by expected residual income, dividends or cash flows), and investor sentiment (non-fundamental price pressures associated with behavioral biases or liquidity driven demand). Hence, our stock picking approach is focused sharply on detailed analyses of company fundamentals and investor sentiment. The Nipun approach is not high frequency “black box” arbitrage, nor are we betting on macro trends. We focus exclusively on stock selection by applying our investment framework.