Investment Process

Investment Process

In essence, Platinum seeks a broad range of investments whose businesses and growth prospects are being inappropriately valued by the market.  To do this, Platinum employs a team of specialist analysts who take a global perspective and apply screening and intensive research to pin-point outstanding opportunities.

Market Behaviour

Just as optimism and pInvestment Processessimism ebb and flow in stock markets, similar sentiments affect the share prices of individual companies.  That is to say, there are times when events that are transitory in nature have a disproportionate effect on a company's share price, be they positive or negative.  There is thus a tendency for shares to deviate significantly from their inherent trend line.  The secret lies in differentiating between truly interesting companies that are facing temporary set-backs from those which have lesser businesses and face fundamental problems.


Platinum uses various devices to make sense of the universe of stocks available around the world.  These include software screening which allows for the selection of companies based on very specific criteria ("screens") across a databank of several thousand companies.  Platinum is able to delve deeply into cross-comparative studies of companies around the world, thereby drawing up short-lists for more intense study.

In setting these screens, Platinum may build on a hypothesis regarding social, political, or economic change.  For example, the screen may seek to identify industry groups that are currently out of favour with investors.

Great store is placed on the cross-pollination of ideas and the view that increasingly more weight should be applied to the global context of a company's operations than purely regional considerations.

Idea Generation

Generation of themes and ideas is eclectic in nature.  Apart from applying numeric skills, there is a constant input from observations of the changing social and political landscape.  By locating all research efforts in one place and yet operating under global mandates, Platinum is able to facilitate the free-flow of information between analysts with different geographic and industry responsibilities.  While physical distance from principal markets may be an impediment, Platinum believes that distance has the great advantage of acting as a filter and has a calming influence in making objective assessments.  Even so, analysts are required to travel extensively to visit the companies, their competitors and suppliers.

Detailed Research

Once a company has been identified as a potential investment opportunity, it is investigated by the analyst who will call on the resources available to Platinum.  These may include material from the company itself and its competitors, reports from stockbroking analysts, industry material and consultation with experts.  In reality, this information is available to all serious participants but it is the interpretative methodology and skill that really counts.  The work concludes with a detailed report being written.  This is then subjected to the scrutiny of team members who meet to vigorously investigate the merits of the case.  The purpose of these meetings is to expose areas of concern and potential flaws rather than to achieve a consensus.  The final decision lies not with a committee but solely between the promoter of the idea and the relevant Portfolio Manager.

The investment review will highlight very specifically the achievements that are expected from the company being proposed.  These vary considerably depending on the style of company involved, but among other things, would include sales and earnings targets.  Failure to meet these targets would raise concern, and notwithstanding the price action, could result in the shares being sold. It is Platinum's experience that when targets are met or exceeded, the share price tends to overshoot expectations.  Flexibility in selling may allow for the market's tendency to overreact.


To ensure that each analyst's work and contribution is objectively measured, stock picks are tagged, whether purchased or proposed, and the performance thereof monitored annually.  This significantly affects annual bonuses.

Portfolio Construction

As a consequence of the investment process, portfolios will be built-up from a series of individual stock selections rather than pre-determined asset allocations.  Investment weightings will vary considerably from benchmarks such as indices issued by MSCI Inc.

In a way, portfolio building can be seen as a layering process.  At any time, there will be newly introduced ideas, others that have made an initial contribution and others that are starting to tire.  Care is taken to understand the inter-relationship of stocks within a portfolio.

The number of securities held by a portfolio will tend to be relatively small.  Generally, there are 30 to 200 securities depending on whether the portfolio is global or regional or industry focused.

When undervalued securities cannot be found, Platinum will leave funds in cash.  Therefore, after a period when the markets have performed strongly a portfolio may hold significant cash positions.

Likewise, when Platinum’s research reveals companies whose prospects are improbably refulgent and extravagantly overvalued, Platinum may short sell as a way of managing portfolio risk.

Video - Platinum's Investment Process
A short video titled "Platinum's DNA"
Investment Process Animation

Investment Process

For an insight into Platinum's investment process, view the animated process by clicking below.

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