Strategy

Our investment strategy can be characterised as ‘value with a catalyst’.

UNIVERSE

QUOTED WEST-EUROPEAN SMALL CAPS

Strategy

Value With a Catalyst

1. Research approach
  • Value oriented with a focus on companies which (should) consider changes or implement changes
2. Selection
  • Bottom-up
3. Actively unlock value process
  • Pro-active shareholdership: when necessary, initiate the process of unlocking value

Value
With a
catalyst

Monolith applies a ‘value with a catalyst’ approach and invests mainly in undervalued companies whereby clearly demonstrable catalysts can be defined which justify the expectation that the undervaluation of these companies could disappear in the foreseeable future. Our strategy is based on the conviction that stock markets occasionally are inefficient with regard to the pricing of individual shares and that above average returns can be obtained by exploiting imperfect information and analyses in the stock market. Particular emphasis is placed on the selection of individual shares. Monolith will pursue to compensate for market imperfections, primarily through in-house research and analysis

This encompasses direct contact with senior management of companies, their competitors and other stake-holders in their relevant vicinity. Furthermore, investment decisions are based on proprietary valuation models which aim to determine the correct fair value of a company with emphasis on absolute – as opposed to relative – valuation criteria. When considering when and in which case we convert our assessments into investment decisions, we will check if there are catalysts which can rectify the incorrect valuation of a share on the stock exchange in the foreseeable future

Active investors limit their risk by researching companies in detail, while passive investors ‘reduce’ risk by holding a highly-diversified portfolio. According to Monolith, intensive (auditing-) research and a concentrated portfolio combined with an active approach, will deliver above average returns. Because of the focused character of the portfolio we have obtained not only solid returns, but also a very low correlation with several reference indices. For (potential) participants, this is a very attractive approach.

A Concentrated
portfolio

Information Memorandum

Monolith
and sustainability

Although Monolith Investment Management B.V. as manager of Monolith N.V. ('Monolith') and Monolith Stonehenge Coöperatief UA ('Monolith Stonehenge') supports a more sustainable society, Monolith and Monolith Stonehenge do not specifically focus on sustainability factors and therefore do not have an explicit sustainability objective.

Monolith's and Monolith Stonehenge’s investment policy does assess sustainability risks, but they are not leading. A sustainability risk is the risk that an event or circumstance in the field of sustainability will negatively affect the value of investments. For example, if a company's production process is deemed environmentally unfriendly, or if a company is found to be involved in child labour, corruption or bribery. To mitigate such sustainability risks, Monolith and Monolith Stonehenge apply a minimum level of sustainability in the selection of investments. This lower limit consists of the internationally shared standards and values that companies should meet, as described in the ten Global Compact principles of the United Nations (UN). The Global Compact principles form an internationally recognized and widely supported framework of standards for companies and include the themes human rights, labour conditions, environment and anti-corruption.

Companies in the portfolio