Our conviction is that what determines stock returns over time is valuation in relation to profitability and growth, rather than size and share liquidity. Compelling valuations relative to earnings prospects are in our opinion most often found in the lower end of the market-cap space. Small is not tantamount with vulnerable, unproven and unprofitable. There is a wide variety of smaller companies with proven track records, strong balance sheets and superior profitability. While share prices may fluctuate due to constrained liquidity, actual financial performance tends to be far more stable, resulting in capital appreciation over time. These are the typical investments of Taiga Fund.
Risk management is embedded in the stock selection process. By looking deeply into each investment case we measure risk in terms of financial leverage, cyclicality, structural growth factors, operational leverage and earnings visibility. We invest only when risk/ reward is strongly tilted in our favour.
Our ambition is to produce attractive risk adjusted returns, but also high absolute returns. Taiga Fund’s founding investors are a number of family offices with long-term capital who seek to use this advantage to benefit from inefficiencies in the small-cap space. Potential new investors should have a similar perspective.
Long biased long-short equity. High conviction investment ideas only. Concentrated, bottom-up, valuation based with active ownership agenda.