Welcome to Perennial Value
Perennial Value Management was established in March 2000 through a joint venture between John Murray (Managing Director, Perennial Value Management) and Perennial Investment Partners Limited. Perennial Value is an active Australian equities manager employing a bottom up, value-style investment process when picking stocks.A bottom up approach is one where companies are considered on their own merit, by taking into account factors such as management and the business model as well as other characteristics. Perennial Value seeks to buy good businesses that are undervalued with an underlying belief that good businesses are eventually recognised by markets and are positively revalued.
Perennial Value Investment Process
Investment Philosophy
Perennial Value is a specialist active Australian equities manager whose investment process is based on a 'value' stockpicking investment style. Perennial Value holds the belief that investment markets are not fully efficient as asset prices are sometimes driven by irrational influences. As a value investor, Perennial Value aims to invest in "good businesses that are under valued" with an underlying belief that good businesses are always eventually recognised by markets and re-rated to overall market multiples.
Stock Selection Process
Perennial Value investment process begins with the screening of their investment universe. Many of these stocks are actively researched by the team through a bottom up fundamental stock picking process. Stocks are eliminated base on factors such as expensive P/Es, high debt and lack for earnings track records. Detailed modelling and research is then conducted. To qualify for investment, stocks must have sustainable businesses and offer a good share prices. Every potential investment opportunity is subjected to a standard range of steps in assessing key qualitative and quantitative criteria. The following key criteria are assessed:
- Sound financial position (low debt)
- Good Management
- Demonstrable profit track record
- Strong market positions
Perennial Value places a great emphasis on direct company and industry contacts and are an integral part of the process. Relative value is measured by Perennial Value's proprietary stock ranking model, the 'Perennial Value Screen'. Having ratified the numbers, six key financial measures of each company are measured by the Perennial Value Screen:
- Price to Earnings;
- Price to Free Cashflow;
- Gross dividend Yield;
- Price to net tangible assets;
- Net interest cover;
- Earnings Growth.
Each stock is assigned a ranking according to each of the six key measures noted above. Each stock is then assigned a weighted average final score, which determines final rankings. The outcome of this research process is a list of stocks that are eligible for inclusion in the portfolio.
The final portfolio is constructed according to a strict risk management and compliance regime. The main driver of Perennial Value's portfolio construction is the teams desire to deliver a 'true to label' value portfolio at all times. This means that the portfolio has a strong bias towards the best ranked or best value, stocks in the Value Screen.
Perennial Value manages the following portfolios:
- Perennial Value Australian Shares
- Perennial Value Shares for Income
- Perennial Value Smaller Companies
- Perennial Core Australian Shares
John is supported by five analysts, a senior portfolio manager and a dealer.
