Инвестиционни идеи 2024. Глобален Бюлетин ->

Investment Philosophy

Karoll Capital’s Investment philosophy - The 5 Investment Pillars:

Investment Process

Our Investment universe

Selection Filters:

4,000+ listed companies in CEE

Mkt cap & Liquidity

Investment Universe - 1,500

Corp Governance, Transparency, ESG

750

Sector Outlook & Company Competitiveness

500

Financial Strength

250

In-house Valuation

Survivors
150

Investment Constraints:

The Four S's of our Investment Process

Screen

1
  • In-house / external screening tools (Bloomberg, Reuters, X3, etc.)
  • Sourcing ideas from 3rd party research
  • Conference attendance
  • Company visits
  • ESG sector exclusions
  • Market intelligence

Study

2
  • In-depth analysis conducted in-house
  • Assessing sector dynamics
  • Studying business model and company’s ability to generate return > cost of capital
  • Identifying companies with improving margins and low debt levels
  • Calculation of intrinsic value employing DCF method; Fair value calculation based on peers comparison ► target price
  • Analyst proposal to PMs

Shape

3
  • Investment Committee decides on country and sector allocation limits
  • PMs decide on inclusion of stocks in portfolios and weight in line with mandate constraints and risk parameters
  • Benchmark unconstrained approach – at a country and individual stock level

Supervise

4
  • Regular review of portfolio components’ fundamentals
  • Exit discipline: excessive valuation; unexpected deterioration in fundamentals; loss of confidence in management; better alternatives
  • Monthly attribution analysis to determine how performance is affected by country/sector/stock selection and quantify true alpha 
  • Risk management: oversight by CRO and investment committee

Investment team meetings

Weekly meetings
PMs and analysts interact and exchange ideas
Monthly meetings
Portfolio reviews of mutual funds / managed accounts, attribution analysis Overview of market development ► modify portfolios if necessary
Quarterly meetings
In-depth analysis of investment portfolios Strategic asset allocation decisions
Ad-hoc meetings
Reaction based on trigger from the in-house surveillance system

Emerging Europe
buoyant region converging with the rest of Europe

  • incubator for fast-growing companies
  • increasingly participating in European & global supply chains - vast number of companies shifting production here

Central & Eastern Europe is a diverse region offering appreciable scale:

  • 200+ mln combined population

  • USD 2.5 + trln
    GDP

  • 4,000+ listed companies

  • USD 1+ trln total market cap

Emerging Europe
among the fastest growing regions

Country Group Name

2018

2019

2020

2021

2022

2023

2024

2025

Advanced economies

 2.278 1.743

-4.404

 5.197 2.427 1.107 1.595 1.889

Euro area

 1.789

 1.592

-6.086

 5.244 3.058 0.501 1.788 1.936

European Union

 2.213 2.009

-5.593

 5.356 3.228 0.662 2.068 2.176

Emerging market and developing economies

 4.621 3.605

-1.892

 6.617 3.728 3.734 4.262 4.327

Emerging and developing Asia

 6.41 5.21

-0.618

 7.18 4.387 4.871 5.209 5.272

Emerging and developing Europe

 3.429 2.515

-1.721

 6.8

-0.02

 0.628 2.527 2.344

Latin America and the Caribbean

 1.196 0.17

-6.985

 6.903 3.471 1.742 2.357 2.546

Middle East and Central Asia

 2.649 1.66

-2.701

 4.494 4.954 3.607 3.536 3.614

Sub-Saharan Africa

 3.334 3.177

-1.649

 4.699 3.58 3.71 4.084 4.17

 

* Source: International Monetary Fund, World Economic Outlook Database, October 2022

Emerging Europe
boasts lowest taxes & labor costs

Corporate tax rates

Labor cost per hour ( E ), 2017

Taxes much lower in CEE vs. developed world

States provide tax incentives & additional stimulus to attract foreign investors

While convergence has been driving income growth, wages are still far below European averages

Min wages range b/n €194 in Bulgaria and € 425 in Turkey, vs. €1,473 in Germany and €1,500 in UK

Emerging Europe
stock markets lagging behind

 
 MSCI EFM
Europe+CIS
ex RU, €
31.12.2022
1Y20.54%
3Y,
annualized
7.99%
5Y,
annualized
1.70%
10Y,
annualized
-1.88%

Emerging Europe
compelling valuations

FORWARD P/E

P/B, MRQ

DIV YLD

P/E PER COUNTRY, TTM