Professional and Reliable
When the CEO of Genève Invest asked me to write about Genève Invest's core competence, I found this assignment anything but easy. It's not that I don't know the company.
As Chief Investment Officer, I helped found the firm 20 years ago. But there are countless asset managers in Europe.
What sets us apart from other firms?
Since Genève Invest was founded 20 years ago, we have consistently been following a value investing approach in equities as well as in corporate bonds. Value investing is one of the great disciplines in the world of investing. Simply put, it is about assessing the real value of an investment and buying when the price is significantly lower. At its core, the fundamentals of value investing are threefold:
the compilation and evaluation of information to determine the actual value of a company;
the realisation that attractive investment opportunities arise when the price traded in the market is significantly lower than the actual value;
the emotional discipline to act when such an opportunity arises and otherwise to have the patience to wait and see.
Among the investors, there is the group of “true believers”, i.e. those who are wholly convinced of the concept. Each year, they make the pilgrimage to Omaha in the USA to receive the latest thoughts and investment ideas from the value guru, Warren Buffett. Then there is a much larger group that simply rejects the value concept. They argue that you just can’t beat the market. For them, analysing individual securities is a waste of time. Therefore, they prefer investing in stock and bond indices. And finally, there are private individuals who have so far given little thought to the subject of investing.
If you explain the value concept to them, they either react sceptically, or they often no longer follow the explanations after the first sentence because they find the concept too abstract or simply too boring. In truth, the basic idea is very simple: basically, almost everyone is a value investor in the area they are familiar with. Anyone who deals with real estate knows that there are real bargains to be had in some phases. For example, a flat owner suddenly has to sell urgently, a foreclosure auction is held, or you learn from a reliable source that a large company is planning to relocate in a region, which will lead to significantly rising property prices. The luxury car enthusiast knows that specific models are often sold at junk prices after ten years. But a few years later, as classic cars, they suddenly experience a significant increase in value again. When planning their holidays, most people have already had the experience that you can sometimes book holiday stays at a considerable discount if you wait until the last moment and have the necessary flexibility regarding the holiday destination.
Although we defined ourselves as value investors in the first years after founding Genève Invest, we never went to Omaha. We do not see value investing as a religion. For us, the concept of value investing was a good starting point for a common-sense approach to investing in the first years after Genève Invest was founded. It is thus the exact opposite of dogma, which can block critical thinking.
Over the past 20 years, we have developed our own investment methods based on value investing. When the founding fathers of value investing were active, there was no internet, computers were not yet used for data analysis, and only a few investors carried out fundamental analyses of companies. Today, there are extensive computer systems to carry out systematic evaluations. Nevertheless, there are tasks, such as evaluating the future cash flow of companies, which computers cannot handle.
We have also found that some market segments are under much less scrutiny than others. While many analysts focus on large corporations, significantly fewer investors are concerned with small or medium-sized companies. Even fewer investors conduct a fundamental analysis of mid-sized firms to assess the quality of the bonds they issue.
Our expertise is not only in identifying investment opportunities and evaluating them. We believe it is essential to obtain further information and thus reach a second level. Further details of the information we obtain at that stage enable us to get a more complex picture that may not be apparent at first glance. This is why we supplement our in-house analyses, for example, with a large number of meetings with the management of companies.
We have found that these meetings are exceptionally useful, as we often receive substantial additional information. This can lead us to evaluate a potential investment target completely differently than the publicly available figures of the company would have led us to expect. The insights gained in this way help us to broaden the basis for our investment decisions. In particular, we can then, in the interests of our clients, take advantage of opportunities that often arise in volatile market phases. Thus, we prefer to buy solid-substance stocks at favourable prices during excessively negative and often unjustified price and share price movements, which will rebound all the more strongly later on.
Nervous market situations often offer opportunities in the bond sector due to liquidity bottlenecks caused, for example, by large investment funds. When big investors withdraw large amounts of money from an investment fund, these funds have to sell large holdings of bonds within a short period of time. A problem arises when a bond is not very liquid. This means that there are not enough buyers in the market to absorb the amount for sale. We are then contacted by brokers who offer us bonds at a significant discount from the current price, without any deterioration in the financial situation or fundamental valuation of the company that is the debtor of this bond.
In this context, Genève Invest’s current size is a key advantage. Large investors who need to place tens of billions are often limited to the large company investment segment. Smaller asset management companies do not have the necessary investment volume to obtain important information to assess companies adequately. Genève Invest, as a medium-sized asset management company, is large enough to have access to relevant information but not too large not to be able to take advantage of investment opportunities that arise.
Every day, we carry out numerous internal and external analyses and constantly exchange information among the members of the Genève Invest team, which currently has offices in Geneva, Luxembourg, Stockholm and Milan. The members of this investment team are available to any client for first-hand explanations of our investment decisions. This may look like a lot of work to outsiders. In fact, it is my conviction that this essential preparation of the investment decision can only be done with a lot of passion. Only in this way can we meet the need of our clients and offer real added value.
This was my ambition when I started this activity 20 years ago – and it still spurs me on today. Over this period, Genève Invest has grown steadily. Each new member of the team brings their individual experiences and thoughts to the table and has helped us to improve continuously. We certainly cannot promise that we will always make the right decision. But we will constantly work hard and go the extra mile to find the best investments for each of our clients individually. This is my promise.