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VALUE
INVESTING

We like to buy cheap assets with high margin of safety. Markets usually offer prices which don´t match real values. The greater the difference between price and value the greater the investment opportunities.

To select companies we analyze current and historical financial statements, searching for low valuations compared to former results over long periods of time or compared to book values. Before acquiring a company we look for some of these requirements: low price/earnings ratio, low price to book value, high dividend yield, high free cash flow yield, and low enterprise value/cash flow. We could buy not-so-cheap companies if we consider their quality warrants investment. We prefer to select companies with net cash or very little net debt. Usually we choose enterprises whose owners or managing directors have relevant stakes in them.

GLOBAL

We invest all over the world in any asset class, both long and short.
In commodities we search for those whose current prices are much lower than their historical real values and which have sound fundamentals.
We invest in precious metals because we consider gold the real money.
We use short selling to hedge our portfolio against potential market risks, mostly linked to excessive credit expansion.

THE AUSTRIAN
SCHOOL OF
ECONOMICS

We take into account distortions caused by credit cycles and their impact on asset valuations. We try to avoid investing in countries which have had a large and rapid credit growth during many years and we usually refrain from investing in indebted companies.

The history of fiat currencies is a history of chronic devaluations steadily eroding savings. Since 1971, this has become even more relevant, because that is the moment when the United States of America cancelled the direct international convertibility of the US dollar to gold. One way to be hedged and preserve wealth is investing in real assets which protect capital against currency devaluations.

CONTRARIANS

We avoid fashions, searching for value where little capital has been invested during long periods of time. We usually find attractive investment opportunities in assets, sectors, commodities or countries out of favour due to temporary problems which often coincides with unfavourable newsfeed.

This essential characteristic of our investment philosophy, together with our global investing approach, makes Salmón Mundi Capital performance different from other savers´ traditional equities or fixed income funds. It could help portfolio diversification.

LONG TERM HORIZON

The best investment returns are produced in the long term. History shows that investment returns are not linear and it could take years until assets quoted under their real value perform better than markets.

We consider five years a reasonable period of time to let investments mature, although it is not a fixed mathematical figure. The money one invests should be savings, not money one needs on a daily basis.

PATIENCE

Our main focus is not on quarterly results or on temporary price movements in the short-run, but on buying and holding good and cheap assets. Once we have selected undervalued assets which fulfil our specific investment requirements we hold them until they reach their true value or until we find another better and cheaper asset available.

Historically greater investment returns are concentrated within very short periods of time. Patience is the scarcest resource in the asset management industry.

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