Blue Boat Investment Trust
Blue Boat is a global, long-only equity fund that aims to generate substantial returns by investing in value opportunities in quality businesses
The Manager aims to generate high returns by investing in quality businesses from around the world. The strategy focusses on identifying companies whose prospects are strong and are offered at attractive prices.
At Blue Boat Capital, the core of our process is orientated around identifying those companies that offer the greatest potential returns to their shareholders. We carefully consider the potential future value of a particular business and compare that to the current market price to get a sense of the returns on offer. From the analysis of many companies, we build a set of opportunities and identify those that offer the most compelling proposition to be included in the Blue Boat portfolio.
In this way Blue Boat is a value-focussed fund, in that we look to invest in companies whose current market price represents an exceptional discount to our expectation of their future value.
Outstanding value opportunities come in a variety of forms. In some cases, we will discover a mature company trading at a deeply discounted price relative to its assets. Where we see a clear path for that value disconnect to be corrected and the potential returns are attractive, we will consider this for the portfolio. However, our preferred route to identify value opportunities is via very high-quality companies.
Fundamentally, a very high-quality business can provide its customers with a valuable product or service, generated at a much lower cost, in an efficient and sustainable way. These companies have exceptional and appropriately incentivised management and the business has prospective channels to reinvest capital at high returns.
Together, these strengths make the business resilient against competitive forces and pave the way for strong future growth, and high future value.
Very high-quality businesses can be found in all kinds of markets and sectors, each with their own unique characteristics. Nonetheless they all tend to share the ability to operate with a competitive edge in a repeatable and robust way. We are open to reviewing them all, but ultimately, we stick to those we feel we can understand.
Our assessment of quality is a rigorous qualitative and quantitative task involving consideration of a multitude of factors. These include analysing the strength of a company’s competitive position, the capability of management and the sustainability of capital returns. Every case is different, and we are careful to consider all the nuances that are unique to each business.
From quality we can get a sense of a company’s potential future value, and the certainty of that value. By comparing this with the current market price offered we can understand the potential returns and risk from investing.
The Blue Boat fund is a concentrated portfolio, constructed from the opportunities that we feel offer the most attractive return profile for Investors. We look to include robust companies and balance the risks faced in particular sectors or markets. We aim to hold our investments for a long time so that each can compound and grow into its potential over many years.
We accept that market volatility is part of this journey. However, our ability to hold investments for the long term is thanks to the underlying quality of the portfolio companies, and the support of you, our partners. Together this gives us great conviction and is an important competitive advantage to generate
extraordinary returns.
Blue Boat’s area of focus is global listed equities.
This universe contains tens of thousands of different securities representing companies of every type imaginable. Accordingly, its best to channel our efforts on areas of the market where we stand the best chance of finding high quality business offered at attractive prices.
There are two key areas that tend to offer the best odds of discovering such investment opportunities. The first is among ‘smaller’ companies. With less market awareness and shallower liquidity, these companies receive less attention from institutional investors. They are regularly led or controlled by founders or families and operate with a focus on long term outcomes. As a result, within this corner of the market we often have better odds of a finding high-quality companies whose potential remains largely undiscovered by the wider investment community.
The second area is large companies that are going through some period of difficulty. All companies encounter hard times eventually, and in the moment the stock market tends to project forward those hard times far into the future.
These opportunities are often hiding in plain sight and are far more obvious in hindsight. In the moment it requires us to carefully consider whether the company is of sufficient quality to get through the difficulty and come out stronger.
Both types of opportunity offer a chance to invest in a quality business that is underappreciated in the market. As the smaller companies grow and succeed, and the larger companies get through their slump, each stand to be better recognised for their true value.
From time to time, we also evaluate equity investments in unlisted companies. For these we set a higher bar to consider investing, but we remain open-minded.
Among the areas we do not participate in, is speculating in exotic securities. We stick to our bread and butter.
For investments in equities quoted on exchanges located outside of Australia, or in companies situated outside of Australia, we may utilise derivatives to protect the Trust’s investments from foreign exchange fluctuations.
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Blue Boat Capital Pty Ltd (ACN 617 864 605) is a Corporate Authorised Representative (1309916) of Bentleys (QLD) Advisory Pty Ltd (AFSL 274444), and in such capacity has been appointed as the Investment Manager for the Blue Boat Investment Trust. This trust is intended for ‘Wholesale Clients’ as defined by the Corporations Act and prospective investors should make their own enquiries and should seek all necessary financial, legal, tax and investment advice about acquiring an interest in the Trust. To the extent permitted by law, any information or advice contained in this email is general advice only and does not take into account any particular person’s objectives, financial situation or needs.
Blue Boat was established in 2017 with a simple investment strategy. We invest in a portfolio of high-quality businesses that we understand, have capable and trustworthy management, decent prospects, and are offered at attractive prices. We look for businesses globally, across different industries and markets giving us the widest possible opportunity set. In finance-speak, Blue Boat is a long-only, value focussed, global equities fund.
We deliberately set no mandate around investment style or exclusions of markets or sectors. We see no upside in implementing rules that would decrease our opportunity set and exclude us from a potentially prosperous investment. The portfolio is limited to only our most compelling opportunities with the knowledge that, over the long term, the market will recognise intrinsic value and our partners will be rewarded with handsome returns.
David worked at Morgans in the Corporate Finance team from 2005 until 2010. After moving to the UK, David got his start in portfolio management with Neptune in London from 2012-2016.
Here he led the global consumer sector research team and ran the consumer discretionary and staples portfolios. Additionally, David worked as a Fund Manager for Neptune’s suite of China Funds. In this role David would often travel to Asia to attend conferences, meet companies, and see businesses first hand.
David has been actively investing in equities personally since he bought his first stock in 1997. His investment philosophy has been steadily developed over that time with major influences from legendary investors Nick Sleep, Phil Fisher, Bill Miller, Howard Marks and Joel Greenblatt.
David graduated as valedictorian from the University of Queensland, earning a Bachelor of Commerce (Honours). He later undertook a Master of Arts in Economics from Cambridge University. His 2006 honours thesis investigated the association between corporate sustainability & profitability, as well as its connection to investors’ returns, and was published in the Accounting & Finance journal. David has also completed all three levels of the CFA exam.
Tim has extensive experience in analysing equities and managing clients’ money. Since 2009 he has been a private client adviser at Morgans Financial (AR number 000343426).
Tim’s career in the finance industry began as an analyst in the Morgans Corporate Finance team in 2006 and later worked at Morgan Stanley Smith Barney before rejoining Morgans.
Tim holds a Bachelor of Commerce from the University of Queensland and has completed the SDIA Securities & Managed Investments accreditation as well as the Ethics and Professional Relationships program from QUT.
Tim is passionate about investing and is a keen student of his investment idols Warren Buffett, Charlie Munger, Peter Lynch, and Li Lu, having read their books, letters and reports extensively. He regularly travels to meet with companies and other fund managers to expand his knowledge, assess the condition of markets and industries, and identify new opportunities.
It was through this experience that Tim had noticed the misalignment in the funds management industry between mangers and investors, prompting the creation of Blue Boat which is designed with the investors’ best interests in mind.
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