KK Group – Main pillars of the strategy
A longterm maintained asset allocation, adjusted to the individual risk capability and risk willingness guarantees the best success – paradigm shifts are risky and can seldom be implemented successfully
A well performing equity portfolio is guided by the life cycle (build up, growth, maturity, saturation) of different markets and companies
The conflicting priorities of economic growth, inflation and increasing interest rates are today’s rationale. The information-clustering as a result of a structured corporate governance leads to an undiminished high volatility. All that requires a higher risk capability
Alpha-risk (individual company risk) gains relevance compared to the Beta-risk (systemic market risk) – the recovery of the total market is widely completed and the individual success proposition of the companies wins more importance
KK Research – Key elements of company assessments
The fair value of a company is determined by the net present value of the realistically achievable future free cash flows – sooner or later the valuation gap will be closed
Who justifies the value of a company with the irrational exuberance of similar companies i.g. reference to peer – will often fail
If the significance of short term financial ratios is rated higher than the sustainable success of a company – some caution should be applied
As soon as board members and CEO’s make a virtue out of impatience and speed of action instead of consideration and experience – discomfort comes to mind
If analysts determine decisions and strategies of companies and on the other side the management makes decisions to please analysts and investment bankers – responsibility and economic logic are perverted
As soon as CEO’s mainly sell the shares of their company instead of products and services – one should question the role of the management
As soon as failures are justified with wrong communication and inadequate corporate governance instead of wrong management decisions, unfavorable cost structures and unsuccessful products – one is deceiving himself
Market players who believe that a variety of guidelines in accounting practices and corporate governance offer a better protection against bad surprises act inexperienced and ingenious – accounting and shareholder relationship are a matter of character.
