When investing, understanding of the macroeconomic environment is a critical factor before taking any investment. We carry out top to bottom analysis, identifying the drivers behind economic events and their potential consequences. As a result of the analysis, we identify the sectors which could be more benefited. We assess the companies within those sectors to determine which are in a better position to take advantage of the environment.

We tend to analyse small-medium capitalisation companies as they are less covered by analyst and present higher opportunities. However, we also complement this approach with the analysis of renowned companies.

The result is a list of 20-30 companies analysed where we understand their business model and the drivers behind their price. The companies are focused on the sectors identified as a consequence of the economic situation. It is updated over time as the situation does. It allows us to create different portfolios, including the companies which present the most attractive investment opportunities at that moment and balancing off a growth-value approach depending on the environment analysed.

Our focus is on: 

Macroeconomy

Analysis of the latest events that affect the economy across the world, paying special attention to:

  • Monetary policy decisions / Interest rates / GDP
  • Their impact across different sectors
  • Change in trends / consumer behaviour
  •  

Company valuations

Fundamental analysis of companies from Eurozone, UK and the US  based on the understanding of:

  • Its business model
  • The situation of its industry
  • Its future Cash flows (DCF Valuation)

In order to design portfolios based on:

Sector

As a result of the macroeconomic analysis, we decide which sectors can be more benefited from the current situation.

Geography

Based on the GDP growth perspectives and the politics of central banks, we pursue investment in different geographies.

Approach

Understanding the part of the economic cycle on where we are allow us to decide between growth or value

At this moment...

As mentioned in our post “sectors more affected by Covid-19”, there will be some sectors more affected than others as a result of this pandemic. Consequently, we are focusing our analysis in the following areas: Utilities/Infrastructure – Biotech – Consumer Staples and Technology. We also understand that due to the last fall in stock markets across the world, equities are the place to be. In terms of geography, the US is apparently in a better position than Europe to benefit from this market. It is due to the aggressive approach taken by the FED concerning quantitative easing. However, the market is unpredictable, and maybe it is wise to keep some money out of the markets to take advantage of futures downturns.