Ibbotson Australian Shares High Alpha - Platypus

Platypus             

Investment Style: Growth

Platypus Asset Management Limited (Platypus) was established in 1998 by Donald Williams and Nicholas Wright and is dedicated solely to management of Australian equities. Platypus is jointly-owned by Platypus Asset Management Holding (PAMH) and Australian Unity which acquired its stake in late 2005. Don Williams and Nicholas Wright are the major shareholders of PAMH.

Platypus believes that companies should exhibit a track record of earnings and preferably dividend growth to be considered a viable investment proposition. The fund manager also believes that share price performance over the medium to long term is driven by consistent earnings growth, so this is the primary focus.

Platypus is of the view that individual companies, sectors, and the market generally tend to trade in well-defined valuation ranges, which provide useful buy and sell signals. The house view is that almost all stocks suffer from significant mispricings from time to time, and that these events offer Platypus valuable trading opportunities irrespective of the long-term investment proposition. Portfolios are expected to have both growth and mid- to small-cap biases on average over the long term.

Platypus' investment process contains five main steps: quantitative screening, quantitative analysis, qualitative analysis, macroeconomic/sector analysis, and portfolio construction.

The process begins by screening the universe for stocks with forecast earnings per share growth of greater than 10.0 percent over the next three years. The firm then undertakes quantitative analysis, breaking down the composition of earnings further, on the remaining stocks to identify companies to be researched in greater detail.

The next stage of research typically involves industry analysis, competitor/supplier analysis, and meetings with company management. Macro/sector analysis is a continuous feature of portfolio construction, but is typically also included as part of the qualitative analysis at the stock level.

Once this part of the process is complete, Platypus is typically left with approximately 60 stocks, 30 of which are already in the portfolio, and 30 of which are potential candidates for inclusion. The house constructs portfolios giving consideration to each stock's liquidity, return profile, and risk contribution. Platypus tends to add to the initial investment as confidence in the position increases, most often around an event such as an acquisition, placement, or earnings outlook/upgrade. Portfolios are expected to hold 25-35 stocks on average.

Platypus' investment team is headed by Don Williams (Portfolio Manager, Director), assisted with ideas generation and company research (both qualitative and quantitative) by two fundamental analysts and a quantitative analyst.