Value Oriented

Investment Approach

OFM utilises a value based investment approach. To put it simply, we aim to buy shares that trade at significant discounts to our estimate of its intrinsic value.

Over the long term, a company’s share price will ultimately be guided by its intrinsic value, and therefore we are not unduly influenced by short term price fluctuations. Risk (capital loss in particular) is managed through suitable diversification and stock selection.

Listed equity securities (shares) can decline, as well as increase in value. The more the value varies over time, the more volatile or risky the security is deemed to be. This volatility is part and parcel of investing in shares. Price volatility is mainly problematic for investors with short time horizons, whose circumstances force them to realise their investments even in unfavorable markets. In contrast short term price volatility should not concern a long term investor whose planned exit is some time away.

This approach to investing is best suited for clients with investment horizons of 5 years or more. Funds being set aside for a child’s higher education, a long term objective of your own, or your retirement plan are good examples of investment needs with long time horizons. Apart from day to day volatility, a particular company’s shares can also lose all or a considerable portion of its value due to specific events such as bankruptcy, expropriation, serious fraud etc. The risk of such loss cannot be eliminated, but can be mitigated by adopting a disciplined approach at stock picking and ensuring that investments are held in a diversified portfolio of stocks.