GSP Global Growth Fund

The GSP Global Growth Fund is a long/short investment strategy targeting high-quality, emerging growth companies with strong fundamentals. Leveraging a rigorous research process, the fund aims to identify under-researched, undervalued opportunities early in their lifecycle.

To manage risk, the fund employs a strict stop-loss protocol and a trailing hedge based on major market indexes. The Investment Manager seeks an annual return of either 3% above the MSCI World Net Index (AUD) or 13% absolute, over a rolling 5-year period.

The fund's investment approach focuses on medium to long-term, growth-oriented equities across global markets. It prioritizes companies with durable business models, market leadership, strong competitive advantages, earnings visibility, pricing power, and structural growth tailwinds.

The GSP Global Growth Fund is a long/short, total return-focused strategy, investing in a concentrated portfolio of 20-40 companies.

Leveraging GSP’s extensive fundamental, bottom-up research process, with a top-down thematic overlay, the fund aims to identify high-quality emerging businesses with structural growth potential. With a preference for cash-generative businesses, strong balance sheets, and highly capable management teams, the fund seeks to discover these opportunities early in a company's lifecycle, when they are typically under-researched and undervalued by the investment market. 

Risk Management:

Stop Loss Protocol: Each position uses a trailing stop loss strategy with three specific levels; 20% drawdown (review of position), 30% drawdown (review of position), 40% drawdown (sell-down of position). 

Portfolio Trailing Hedge: The fund employs a trailing hedge based on the movements of the most representative stock market indexes.

Target Return

The Investment Manager is targeting an after fee, pre-tax return of  the greater of 3% per annum above the MSCI World Net Index (AUD) or 13% per annum on an absolute basis over a rolling 5 years period. 

The Investment Manager’s strategy can be summarised as follows:

• A total return focused, concentrated, capital growth biased investment approach with a specific focus on medium to long term investments in largely growth focused listed shares across the world’s major investment markets.
• The strategy will primarily invest in listed equities or listed equity exchange traded funds (ETFs); however, the Investment Manager will also utilise a range of equity, index, ETF, currency, commodity and derivative instruments to assist us in their management of risk and in achieving its desired net exposure. The strategy will utilise a quantitative and qualitative stock selection methodology and assessment process as well as a well-defined and pre-determined portfolio management, capital allocation, risk management decision making framework and process.

Stock Selection Overview

1. Screening
• The investment process begins with screening global stock markets by integrating a bottom-up approach with a top-down thematic overlay, GSP strategically identifies businesses poised for substantial growth amidst favourable structural trends.
• This dual approach allows GSP to meticulously evaluate individual company fundamentals while leveraging broader thematic insights to ensure alignment with long-term growth opportunities in evolving markets. 
2. Qualitative Assessment  
• The reduced list of stocks undergoes a thorough deep dive investigation to understand each business's model, growth drivers and risks to growth. This includes analysis of:
• Business model and growth strategy
• Pricing power, competitive advantage, or moat
• Scalability
• Revenue and Earnings visibility
• Market position
• Optionality
• Corporate Governance
• Catalysts 
3. In-Depth Research
• Quality Measures: After the initial screen, a quantitative fundamental screening overlay is applied. This assesses balance sheet strength, revenue growth, earnings growth, free cash flow, and other financial performance metrics.
• Value Measures: Following the quality screen, various valuation overlays are applied to assess the company's current valuation. This helps narrow down the shortlist of potential stocks.
• Industry Assessment: The industry analysis framework evaluates competitive forces, including the bargaining power of suppliers and buyers, threats from new entrants and substitutes, and the level of rivalry among existing firms.
4. Portfolio Management:
• Construction of a high-conviction portfolio, agnostic to indices, regions, and sectors, ensuring alignment with criteria for growth potential and financial health.
• As part of this strategy, GSP employs technical analysis to manage positions, prioritizing stocks that demonstrate strong relative price performance compared to their respective market indices.
• Rigorous risk management protocols, including stop-loss protocols and sophisticated portfolio hedging strategies, protect client capital.
• Stress-testing funds against systemic shocks (indices, interest rates, currencies, commodities, and historical market scenarios) ensures resilience and effective.

The companies we invest in hold the following attributes:

• Durable business models.
• Market Leadership.
• Competitive MOATs
• Earnings visibility.
• Pricing Power. 
• Structurally growing tailwinds.

Grey Street Partners (GSP) holds the view that future investment successes will arise from technology enablers and structural shifts impacting society. Accordingly, we dedicate substantial research efforts to identifying and comprehending these trends, which we term our Circle of Confidence (CoC).

Investment Themes: 

Technology and Innovation

• Artificial Intelligence (AI)
• Cloud Computing
• Semiconductors

Software

• Cyber Security
• Software Applications
• Industry Enablers

Digital Transformation

• E-commerce
• Digital Payments
• Digital Advertising
• Digital Banking
• Streaming

Emerging Trends

• Gig Economy
• Emerging Consumer Brands
• Private Markets
• Sustainability

Advanced Infrastructure

• Electrification
• Autonomy
• Robotics