LC EQUITY FUND UCITS – LCEU
Value Creation Makes Money
The LCEU team is one of those examples how people with different backgrounds often end up in the same place after a different journey. Raphael always felt that his quantitative background would eventually have to be enhanced with more in-depth fundamental research. Christoph in turn was never quite satisfied with the pure focus on fundamentals and had often witnessed how the market did send signals and that a process combining both fields would greatly enhance long-term returns. Furthermore, it would also open a much larger opportunity set in the global equities market. 2021 witnessed a true meeting of the minds and LCEU was endowed with a modified strategy. Christoph and Raphael share the deep conviction that a rigorous process is paramount to achieving scalable and repeatable results.
At the core our approach lie two important facts. Value Creation Makes Money and Purchase Price Matters. The market rewards companies which create a lot of value not only in the long-term but already in the mid-term. A thesis for which we statistical proof and a principle which has withstood and will withstand the test of time. This is especially true in more dynamic and complicated world. We are students of business models, and a select few companies grow value above average for extended periods of time. While our holdings operate in different industries the underlying business model mechanics show a great deal of similarity. We do not compromise on the criteria in our value creation circle.
In our experience there is no better investment than a true value creator which is trading at a cheap or reasonable valuation. We continuously ask ourselves “Are we also good stockweighters, not just stock pickers? This is an integral part of our investment process as we believe that stockweighting plays as crucial role as stockpicking in alpha generation over the long term. The quantitative side of our research provides an important feedback loop in this regard. On rare occasions we will leverage Limmat Capital´s existing and extensive quantitative capabilities to reduce exposure for capital preservation purposes or to take advantage of a tactical or thematic opportunity.
Executive Management
RAPHAEL RUTZ
Portfolio Manager
- Certified International Investment Analiyst (CIIA)
- 27 years of experience
- Continuous learner
- " Process first " Philosophy
- DNA of successful entrepreneurs and analyzing winning business models as main interests
CHRISTOPH SCHAUBMAYR
Portfolio Manager
- Chartered Financial Analyst (CFA)
- 14 years of experience
- Independent thinker with contrarian leanings
- Statistical background = " Numbers first, story later " mentality
- Dynamism of capitalism, value creation and innovetion as main interests
Value Creation Makes Money
ABOUT US
The LCEU team is one of those examples how people with different backgrounds often end up in the same place after a different journey. Raphael always felt that his quantitative background could be complemented with more in-depth fundamental research. Christoph in turn was never quite satisfied with the pure focus on fundamentals and had often witnessed how the market did send signals. A process combining both fields would greatly enhance long-term results. Furthermore, it would also open up a much larger opportunity set in the global equities markets. 2021 witnessed a true meeting of the minds and LCEU was endowed with a modified strategy. Christoph and Raphael share the deep conviction that a rigorous process is paramount to achieving scalable and repeatable results.
OUR APPROACH
At the core of our approach lie two important observations. Value Creation Makes Money and Purchase Price Matters. The market rewards value creators not only in the long-term but already in the mid-term. A thesis for which we have statistical proof and a principle which has withstood and will withstand the test of time. This is especially true in a more dynamic and complicated world. We are students of business models and only a select few companies grow value above average for extended periods of time. While our holdings operate in different industries, the underlying business model mechanics show a great deal of similarity. We do not compromise on the criteria in our value creation circle.
There is no better investment than a true value creator trading at a cheap or reasonable valuation. We continuously ask ourselves: “Are we also good stockweighters, not just stock pickers? “ This is an integral part of our investment process as stockweighting plays as crucial a role in alpha generation. The quantitative side of our research provides an important feedback loop in this regard. On rare occasions we will leverage Limmat Capital’s existing and extensive quantitative resources to reduce exposure for capital preservation purposes or to take advantage of a tactical or thematic opportunity.
THE FUND
HOW CAN I BE PART OF LIMMAT CAPITAL SICAV – LC EQUITY FUND UCITS
LCEU is a truly differentiated fund and the UCITS structure makes the unique investing framework accessible to retail and institutional investors alike. The LCEU board has decided to open the A shares (0.25% Management Fee and 5% Performance Fee “HWM”) to all investors for a limited time. The fund can be subscribed on all major platforms in Switzerland, Liechtenstein, and Austria.
- ISIN LU1749419120 - LIMMAT CAPITAL SICAV – LC EQUITY FUND UCITS, Share Class A-EUR
- ISIN LU1749419047 - LIMMAT CAPITAL SICAV – LC EQUITY FUND UCITS, Share Class A-CHF
- ISIN LU1749419393 - LIMMAT CAPITAL SICAV – LC EQUITY FUND UCITS, Share Class A-USD
FAQ
This is a fair assessment. When we talk about growth, we are mainly talking about the importance of growth in value creation, this could also include a high yielding stock (value stock) with an average growth rate. Similarly to growth investors, there are situations where we are willing to pay a higher multiple. In what bucket should we put cheap stocks which exhibit significant growth?
On a per-share basis, the biggest value creator is likely to be found among the Magnificent 7, as they have many verticals or segments which are growing strongly. We are moving into a winner-takes-all world where a significant amount of capital outlay is required and where it will be extremely difficult to disrupt like in the past. The biggest disruptors over the last decades originated in the software, which is becoming commoditized. Disregarding dramatic stock price fluctuations and not uttering a buy recommendation, TSLA is a prime candidate in Christoph’s opinion. However, there is a vigorous internal debate.
We are collaborating with some truly exceptional people whom we have known for more than a decade. Modelling, for example, is done by an outstanding analyst in Sri Lanka with impeccable credentials. When it comes to research, we focus on purchase price and expected returns, rather than having very detailed models (80/20). Within our universe of winners, one generally gets to an 80% confidence level and big picture understanding in a reasonable amount of time. Purchase price matters more than forecasts!
We do not think there is an inconsistency here. The goal with our tactical positions is to get it approximately right in situations with outsized return potential. We have a stringent set of criteria which need to be met.
We are not valuation agnostic and will buy, sell and size according to our expected return models. Most indices are very concentrated and sometimes go through periods of stagnation. Lastly, we have the clear ambition to minimize downdrafts to enable the portfolio to compound at higher rates. Having said that, it is difficult to argue that ETFs are not a viable alternative. Nevertheless, that still does not solve the problem of when and how to buy. Outsourcing these decisions to a one-stop shop is a smart thing to do in any case.
