MANAGEMENT

Management quality has always been our main priority, superseding other objectives like asset growth. The goal is to provide long-term performance with minimal risk. To that end, we have developed a management philosophy and an analytical process that we adapt and refine continually with our teams. Our funds invest in companies that are well-managed and highly undervalued, regardless of their reference indices.

Fundamental asset management

An intimate understanding of companies and an in-depth examination of their fundamental value form the pillars of our management and our performance.

We focus on companies whose business models we understand. Investment decisions are based on the intrinsic value of these businesses, calculated by including important safety margins in our forecasts. We invest in companies whose market value is significantly discounted from the intrinsic value.

This basic investment approach requires remaining focused on the long-term prospects of companies, rather than short-term trends or market patterns.

Analysis process

To improve our understanding of the business, analysis begins with a systematic meeting of managers, and a compilation of all sources of information that may broaden our understanding of the company: factory visits, discussions with customers, competitors and suppliers.

A proprietary model is then produced, including a thorough analysis of past accounts and projected results, which allows us to estimate the intrinsic value of the business.

Lastly, each case is given a quality ranking, by synthesizing the strength of various criteria as it pertains to the business, such as the quality of the company’s executive management team, the level of transparency, or the logic of its capital allocation. This risk indicator allows us to prioritize our investment ideas based on the risk-return ratio.

Sub-portfolio management

Whereas company assessments are more effective when conducted by a group, the best ideas are rarely consensual.

Therefore, we have chosen to divide the assets of the Sextant funds into sub-portfolios, each managed independently by one of the team’s managers. With different backgrounds, ages, and sensibilities, the managers have the liberty to invest according to their own convictions, or to subscribe to the ideas of others. The youngest are empowered and those with more experience are challenged. Thus, the funds naturally are concentrated in the team’s strongest convictions.

OUR INVESTMENTS

The long-term approach of our philosophy is above all a mind-set. We buy shares in companies for an indefinite period for proprietary purposes. The timing of their sale is determined by valuation, not a pre-defined investment horizon. The long-term approach also provides the opportunity to accumulate experience. We advocate and strive to develop this long-term tradition, which is the key advantage that enables us to explore alternative niches where it is easier to make a difference. Here are some examples that illustrate the approach that Amiral Gestion has championed since its inception.
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aufeminin.com

Information website targeting women.

aufeminin.com

Information website targeting women.

One of Sextant PEA's first investments in 2002. The Internet bubble had burst, and the market disparaged what it had extolled a short time earlier. At under one euro, shares were trading at less than the company's net cash position. Nevertheless, it was experiencing strong growth and was no longer losing money. The site would prove consistently successful through the 2007 takeover bid by Axel Springer at EUR 32 per share.
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Facebook

Social networks

Facebook

Social networks

After its 2012 IPO at USD 38, investors abruptly lost confidence: the site was still not making money and some wondered whether Mark Zuckerberg wanted to make his company profitable. Share prices collapsed. At the time, Amiral Gestion had substantial experience in Internet economic models, having tracked Google since 2004. Entry barriers and the potential for monetization convinced us to buy the stock at USD 19 in March 2013, after which the stock experienced impressive growth.
 
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Jacquet Metals

Metal distributors

Jacquet Metals

Metal distributors

As early as 2005, the Sextant funds held shares in the French metal wholesaler, managed by the talented Éric Jacquet. He was able to take advantage of the rise in metal prices while preparing for the downturn of 2008. Well-poised and in the midst of the world economic crisis, Jacquet Metals launched an attack on its competitor, IMS, which was four times its size. We knew both companies very well, and they waged a veritable communications war until Jacquet emerged victorious. Over the years, the experience that we have gained about this issue has enabled us to identify both entry and, when necessary, exit points for this extremely cyclical company, which has made notable progress in its sector.
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LG Household & Healthcare

Cosmetics

LG Household & Healthcare

Cosmetics

In 2011, Amiral Gestion identified a peculiarity in the Korean market: many preference shares (which offer the same dividend as normal shares but have no voting rights) were trading at phenomenal discounts, sometimes at 80% of normal share prices (vs. an average of 20% in the West). Many thought that there was no reason for this to change since the practice had persisted for many years. For our part, we focused on the cosmetics group, which stood out given its operational performance, professional management, and sound corporate governance. The business proved sufficiently predictable over the long term and the dividend was high, which offered protection in the event that the undervaluation persisted over time. The shares benefited from the rise in the normal share's valuation and from a sharp reduction in the discount, allowing us to increase our initial investment several times over.
 
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Oeneo

Corks and barrels for the wine industry

Oeneo

Corks and barrels for the wine industry

At the end of 2009, Oeneo was obsolete and heavily in debt. Its DIAM technological cork was still a manufacturing gamble. Nevertheless, we recognized that, at EUR 0.75, the share price did not even value the oak stocks of Oeneo’s cooperage activity, even though the Hériard-Dubreuil family had loaned the company the funds necessary to emerge from the red. After an extensive competitive survey, we were confident of the success of DIAM, which has since supported the company's strong, profitable growth. The shares traded at nearly EUR 5.00 in early 2014.
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Whitbread

Mid-range hotels and cafeterias

Whitbread

Mid-range hotels and cafeterias

We have been shareholders of Whitbread since October 2011. The company is a leader in the mid-range hotel and cafeteria segments in the United Kingdom. When we purchased our shares, they traded at a 2012 P/E ratio of 10 and the value of the hotel properties covered 85% of the company's enterprise value. Whitbread then designed a viable development plan that would ensure medium-term growth of more than 10% a year in its sales revenue and earnings per share. This growth strategy was effectively implemented by the management, and the results have repeatedly surprised the market. As we write this, the share value has multiplied four-fold, including dividends.

Warning: past performance is not indicative of future performance
Legal Notice - Regulatory information
© Amiral Gestion, a French simplified joint stock company (société par actions simplifiée) with 629,983 Euros of share capital - Asset management company authorised by the French Financial Markets Authority under number GP-04000038
Insurance brokerage company registered in the French Register of Insurance Intermediaries (ORIAS) under number 12065490.