About Us

Our Investment Approach

We are an experienced team with a consistent investment philosophy, aiming to invest with a long-term perspective.

We believe that a company’s ability to generate cash flow, and what they ultimately do with this cash, is what drives value in the long run. We invest in ‘quality’ companies that compound free cash flow driven by a high-returning, sustainable business model.

We approach each business with an absolute-return mindset, prioritising the protection of client capital as well as growth. As a result, we are benchmark agnostic and our portfolios reflect our best ideas instead of the composition of indices.

At LGM, we characterise high-quality companies as those that have a:

  • Sustainable business model;
  • Robust balance sheet;
  • Proven management team; and
  • Clear and fair alignment between majority and minority shareholders.

The characteristics we favour mean that our portfolios are biased towards domestically focused businesses – mainly in the consumer, financial services, telecommunications and healthcare sectors.

Our Philosophy

Our investment philosophy is based on quality investing, long-term analysis and trust, together with a recognition that indices are historic and do not reflect future opportunities.

 
Quality

We believe that by investing in high quality companies over the long term, the compounding of consistent returns will lead to superior investment results. Time, we maintain, “is your friend” and quality is the starting point for all investment decision-making.

 
Long Term

In the short term asset prices are volatile; over the long term we believe that the value of an asset should be reflected in the share price.

 
Trust

Trust is inherent in our business activities. Above all, we respect the trust that our clients have in our investment team to steward and to grow their capital. Trust is also implicit in our relationships with the management of the companies in which we invest.

Stewardship Code Position Statement

LGM Investments Limited welcomed the publication of the UK Stewardship Code, as we believe asset managers can help improve corporate governance arrangements in their investee companies. The Financial Reporting Council (FRC) noted that some aspects of the Code are not directly relevant to all institutional investors. We explain below how we apply each of the Code’s seven principles.

Institutional investors should publicly disclose their policy on how they will discharge their stewardship responsibilities.

When making investment decisions, our research goes beyond company analysis. We also consider the surrounding economic environment because this can influence the valuation of individual stocks. We believe political, economic and corporate disclosure risks are particularly important in immature stock markets, and we monitor these closely.

We aim to identify high-quality, growing companies with strong capital management. Companies that meet our criteria typically have good corporate governance standards and a strong management team.

In June 2008, we signed the United Nation’s Principles for Responsible Investment and we are meeting the six objectives:

  • We incorporate ESG factors into our investment process.
  • We raise ESG issues in discussions with the management of companies we invest in or companies we are considering investing in.
  • We vote all proxies (where the client has delegated the authority to us and where voting services are available to us) in line with both our proxy voting policy and what we believe to be in the best interest of our clients.
  • We ask our service providers about their ESG policies.
  • We support organisations promoting ESG awareness.
  • We are members of the Association for Sustainable & Responsible Investment in Asia (ASrIA) and the Asian Corporate Governance Association (ACGA).

Institutional investors should have a robust policy on managing conflicts of interest in relation to stewardship, and this policy should be publicly disclosed.

We’ve documented our policy on managing conflicts of interest that may exist between us or anyone linked to the firm and our clients. We provide copies of the policy upon request.

Institutional investors should monitor their investee companies.

Company visits are at the heart of our research-based approach. We usually visit companies before investing to assess their management quality and financial strength, and we stay in touch with them once we’ve invested.

Institutional investors should establish clear guidelines on when and how they will escalate their activities as a method of protecting and enhancing shareholder value.

Shareholder value is extremely important to us. If a company acts in a way that is harmful to the long-term interests of shareholders, we sell our investment.

Institutional investors should be willing to act collectively with other investors where appropriate.

Where appropriate, we cooperate with other investors to promote good governance of the investee company. Please contact Thomas Vester (Chief Investment Officer) to discuss this further.

Institutional investors should have a clear policy on voting and disclosure of voting activity.

We believe our policies ensure that proxies are voted in line with our clients’ best interests, fiduciary duties, advisory contracts and regulation. Our voting records are not public because we believe this information is confidential to our clients.

Institutional investors should report periodically on their stewardship and voting activities.

We report on relevant voting activity if a client requests this.

Committed to ESG principles

ESG-related issues are key to creating long-term investor value. That’s why we carefully consider them in our investment process.

Our team considers the potential impact of ESG issues related to investments in our portfolios, and we prefer partners who do this too.

Proxy Voting

We vote at all shareholder meetings on behalf of our investment clients, using guidelines that outline our expectations regarding companies’ corporate governance practices, the protection of shareholder rights and the disclosure of information prior to general meetings. However, if a company makes a strong case for not complying with our guidelines, we will take this into account and adjust our vote if we believe this is in the best interests of shareholders.

Engagement

We work closely with investee companies to help them improve their overall performance and management of ESG issues.

Our engagement with companies is usually one-to-one, but we also collaborate with other investors or stakeholder groups.

We aim to build trust through constructive and confidential dialogue. Ultimately, we want to gain the best understanding of how ESG issues fit into companies’ business strategies.