Introduction
SHUAA Capital has a differentiated and unique public markets platform that invests in publicly listed securities through fund structures, with a focus on Middle East markets.
Goldilocks Investment Company Ltd
Goldilocks is an open-ended fund launched in 2015 and managed by ADCM Altus Investment Management Ltd. Goldilocks predominantly invests in GCC-listed equities with a long-term goal to compound capital at a high rate of return whilst minimising the risk of loss of capital by investing in listed companies trading at discount to intrinsic value.
Goldilocks follows an investment approach based on constructive activism. The fund operates with the support of other shareholders to ensure Boards and management of companies work towards executing turnaround strategies and unlocking shareholder value.
Fund Approach
The Fund operates with the support of other shareholders to ensure Boards and management of companies work towards executing turnaround strategies and unlocking shareholder value.
Investment Approach
Fundamental Analysis
- Seek out and analyse companies exhibiting significant valuation discrepancies between current market prices and intrinsic value
- Identify catalysts for value recognition such as shift in strategy, missteps by management, non-optimal capital structures and operational inefficiencies
Identifying the Goldilocks “Candidate”
- Candidate companies typically have fragmented shareholding, allowing them to work closely with the Board and management without necessarily requiring majority ownership of the underlying company
- Goldilocks companies usually require substantial turnaround and support from external parties to unlock value
Constructive Activism
- Acquiring a publicly disclosed stake with clearly communicated “change” objectives
- Advising management and Board through engagement on company strategy and turnarounds including change in strategic direction, restructuring recapitalisation or pushing for a sale
- Engage in proxy contests for Board control and taking a more direct role if there is resistance
Create Value for All Shareholders
- Implement turnaround strategies and communicate value creation plan with the market and shareholders
- Allow for controlled exit or sale to strategic investors following implementation of turnaround plan
ICC Fund Platform
SHUAA has established the Incorporated Cell Company (“ICC”) fund structure in ADGM to launch differentiated fund strategies under the ICC platform. SHUAA has launched three funds under the ICC fund structure – SHUAA High Yield Sukuk Fund (“SHYSF”), Nujoom Balanced Fund (“NBF”) and Nujoom Aggressive Fund (“NAF”) (the “Funds”) .
The Funds will offer Investors the opportunity to diversify their holdings into well managed balanced funds with allocation across global Sharia compliant equities and fixed income. Fundamental bottom-up analysis towards stock picking and selection of sukuk investments with a focus on maintaining a high-quality investment portfolio with a long-term horizon.
ICC Funds focus is on high quality companies in growth sectors and value stocks
30-40%
Secular Growth
30-40%
Value
20%
Tactical Trades
Investment Philosophy
We invest in businesses, not stocks or securities – in the long term, we believe no investment (however attractive the entry point) can outperform the underlying business.
Traditional Investing
- Industry Standard Classification (e.g. Benchmarking) “Based on business activity or location. Does not tell us “what is driving companies”
- Based on either Top/Down Allocation or Bottom/Up Selection
- Static Economic Models and fixed stock classifications
- “The percentage weight in the benchmark 5%”
- “We are Active Investors, We are under/over weight our benchmark”
- “We have a defensive portfolio”
SHUAA Investment Style
- Proprietary Classification based on Investment Class exposures: “what is really driving companies” No Preference to Country, Sector, or Size
- Top-down Thematic Allocation combined with Bottom/Up Selection: “Simply we do both”
- Adaptive Markets Models and dynamic stock classifications
- “Benchmark weight means one thing for us: lower relative risk”
- Allocation is made irrespective of the benchmark. Benchmark is monitored to understand market convictions and risk only
- Betas are not stable at all times
Discretionary Portfolio Management
Portfolio A – Discretionary Portfolio Management aims to achieve regular income as well as capital growth with an conservative 80% allocation to Investment Grade fixed income securities.
Performance chart of SHUAA Client A DPM versus benchmark
Portfolio B: Discretionary Portfolio Management aims to achieve capital preservation and generate anticipated Target Profit, predominantly from a diversified portfolio of Sharia compliant Investments of varying maturities, with balanced risk metrics.
Performance chart of SHUAA Client B DPM versus benchmark
