Florian Homm, Co-CIO of Absolute Capital Management
Background and track record
I am a hybrid of a European and a American and financier - I was educated at Harvard College and Harvard Business School. I worked with some of the sharpest minds in the business, namely Peter Lynch at Fidelity for many years, I was privileged to work with Professor Michael Porter at Harvard Business School and I'm now on to my twentieth year of audited financial statements as an investment manager, and almost three decades as a proprietary trader. During that time spent, and also thanks to the support of many people at Absolute Capital Management I've been able to secure some sixteen, seventeen prestigious investment awards. I hope this will continue in the coming years.
Strategy and investment style
Our investment styles are based on generating a sustained, competitive advantage for many, many years. One of the programmes we use is 'competitive verification'. When we invest in a company we want to understand the company's customers, their suppliers, their competitors, regulators, substitutes - it's the old professor Michael Porter's strategy, combined with a very strong risk management system. In essence, we are importing the most effective, state-of-the-art investment strategy styles into a less efficient European market place.
Shareholder activism
Clearly, we view ourselves as owners and we are not owners in a superficial manner. We familiarise ourselves intensely with opportunities, and what we'd like to see is our investments trading at near intrinsic value, not at a discount. We live off closing that gap between the current market value and the intrinsic value, and sometimes you will end up in sort of difficult situations, but you shouldn't shy away from that. Any time you are changing things, not everybody might like that. Mostly though, I would say at least 80% of the time, this is a very professional dialogue. Occasionally it gets a little bit excited…
Dow Jones Index at record high
First of all, our performance has been generated in the last years by relatively little market exposure. For example in our Germany fund last year we generated a 16% return on 20% market exposure. That's why when the German index dropped 26%, we actually made some money. So we're not that concerned with upside or downside in the market. If you'd have to ask me right now, I think it's a balanced risk/reward ratio but we don't really make directional calls in our investments.
Looking ahead
I think that we can always find competent people to strengthen our team. Our organisation is in impeccable shape and possibly, we've seen tremendous opportunities to further strengthen our analysis and financials and our capabilities in a cyclical space.
