We invest for the long term in the best companies in the emerging world from which we demand above-average performance.
Our companies must be solid in all areas, financial and extra-financial, and be respectful of all parties involved in their respective ecosystems. Conversely, disrespectful companies expose themselves to the risk of pecuniary or reputational sanctions that negatively affect margins, profit growth and therefore, ultimately, their stock market performance.
Beyond these pragmatic points, the lack of respect shows a mediocre state of mind, inappropriate to our requirements. Nonchalant companies can therefore logically not be part of our selection.
As long-term investors and upstanding citizens, we naturally steer clear of obscure companies, potentially dishonest organizations, and disrespectful people. Exposure to the latter can have a very negative impact on the long-term returns of the portfolio as well as on the quality of sleep and the level of stress of its manager.
Transparency plays a key role in investments and companies reluctant to communicate adequately on their operations and to disclose their figures cannot correspond to our standards. We avoid situations with potential conflicts of interest and/or conflicting transactions, no matter how well documented and “independently reviewed” they may appear. In this context, we do not invest in organizations with a history of dishonesty, breaking the law or abusing the rights of minority investors. Who in their right mind would?
On the contrary, we cherish and look for RESPECT towards each stakeholder: employee, customer, shareholder, and member of the community exposed to the activity of the company.
We avoid activities that pollute the environment when less harmful alternatives exist at a comparable cost. The degradation of the planet for the sole purpose of maximizing profits is not acceptable.
We generally prefer to stay away from the discussion on what is good and what is not for the climate of our planet. Not being scientists, we do not have a set of necessary elements in our hands and we therefore do not think we are in the best position to take a position. We deeply regret that a more balanced, objective and unemotional consultation does not take place in our society on climate problems and how to deal with them, so that even neophytes like us can contribute to change with full awareness and conviction.
At the same time, as humanists and staunch supporters of equal opportunities, we cannot support certain ideas that increase inequality and make it harder for poor people in emerging markets to match Western living standards.
Despite our many questions, it is important for us, long-term and pragmatic investors with common sense, to understand the various environmental and social aspects that can affect the companies we select. Their exposure to the risk of fines and/or to reputational risk due to behaviors that are no longer accepted today must be apprehended. We refrain from investing in companies that are nonchalant and passive in the face of environmental and social challenges.
The last thing we want is for your and our money to end up in the wrong hands.
