OBSIDIAN CAPITAL - SELECT BCI BALANCED FUND

BACKGROUND

Obsidian Capital was founded in late 2007 by Royce Long and Richard Simpson after extensive tenures with RMB Asset Management. The product suite consists of a focused number of investment strategies in both the hedge fund and long-only unit trust areas. The business remains investment-centric, outsourcing all non-investment functions, thereby ensuring that the team stays focused on investment management. Assets under management is more than R2.5 billion.

INVESTMENT PHILOSOPHY AND PROCESS

Obsidian Capital’s investment mantra is “Marry the Valuation with the Cycle”. Royce and Richard have strong macroeconomic and asset allocation skills. They also have strong equity sector skills; specifically, resources and financials. In managing a balanced fund, they attempt to marry their bottom-up analysis and valuations with the macro backdrop. Asset allocation and security selection are equally important as drivers of returns. They incorporate their proprietary “five-block” stock selection process, which includes:

  •  analysis of company profitability growth;
  • dividend yields (relative to competing assets);
  • historical price to earning’s ratios (PE’s);
  • price-to-book ratios; and
  • debt-level analysis.