Perennial Growth is a specialist, active growth-style Australian equities manager. Perennial Growth aims to be a profitable growth investor, seeking companies that offer sustainable and profitable growth prospects at attractive prices. Perennial Growth believes that growing companies generate the most value for shareholders and that these companies attract management interested in building businesses rather than merely managing them.
Our investment philosophy and process
Perennial Growth's investment process is based on a 'growth' stockpicking investment style. Perennial Growth holds the belief that investment markets are not fully efficient as asset prices are sometimes driven by irrational influences. As a growth investor, Perennial Growth seeks to invest in companies that can grow their business profitably and add additional value to their shareholders. Perennial Growth seeks to invest in companies that grow in a sustainable manner.
Stock selection process
Perennial Growth's investment process begins with the screening of the investment universe. Many of these stocks are actively researched by the Team through a bottom up fundamental stock picking process. Stocks are eliminated based on factors such as high debt, low interest coverage and minimum market capitalisation. Detailed modelling and research is then conducted by the Team. To qualify for investment, stocks must have sustainable growth track records and offer a reasonable share price. Every potential investment opportunity is subjected to a standard range of steps in assessing key qualitative and quantitative criteria.
- Opportunity and execution
- Perennial Growth's sustainable growth test
- Lifecycle valuation
- Growth opportunities for the business
- Management to execute on these opportunities
- Growth opportunities for their industry.
- Cashflow growth: the indicator of true underlying growth
- Return on investment is the Team's measure on the profitability of growth
- Change in a company's return on investment indicates the trends in growth.
- The Team's proprietary measure of a business' valuation in accordance to growth expectations and the associated company risk.
Perennial Growth places great emphasis on direct company and industry contacts and this is an integral part of the process. Perennial Growth's proprietary stock ranking model will then rank the stocks according to the above measures.
Each stock is assigned a ranking according to an internally generated modelling process. The outcome of the Team's detailed research process is a list of profitable growth companies that are eligible for inclusion in the portfolio.
The final portfolios are constructed according to a strict risk management and compliance regime. The main driver of Perennial Growth's portfolio construction process is the Team's desire to deliver a portfolio of growing companies that will be profitable for investors.