DNCA Finance

Asset management is fundamentally about conviction

Investing in equities typically offers better long-term performance potential reflecting the higher risk. It is also a means of helping develop and finance companies, and play a part in their growth. Picking the right stocks requires time and good market knowledge.

High-conviction active management

At DNCA, we use high-conviction active management combined with a cautious outlook to meet our clients’ long-term financial goals.

Patience, Prudence and Perseverance; these values guide us day-in day-out.

Jean-Charles Mériaux, Fund Manager and Chief Investment Officer

Because taking opportunities means avoiding crowded spaces, our investment decisions are solely driven by high convictions, something that can result in significant deviations from benchmarks. Our high-conviction management is underpinned by a ceaseless effort to balance risk return.

Corporate growth is central to our investment policy

Our market knowledge and the experience of our management teams means we can stay in touch with a host of French and European companies. We top up the financial analysis with regular discussions with company management and site visits.

These local links are key and enable a 360 analysis to identify the companies with the best growth prospects and thereby support them over time.

We favor stocks that offer good visibility in terms of earnings growth and strong upside potential, at reasonable prices

All our fund managers are also analysts. Discussions between equity and fixed income specialists within the team mean that the company can be looked at from the perspective of the creditor and shareholder so as not to overlook any aspect of its strategy and its long-term commitments. Qualitative analysis, which aims to pick out future successes, is combined with quantitative analysis.

Lastly, an analysis of the macro-economic environment makes it possible to actively tailor our portfolios to changes therein based on our expectations.

A proven investment process

Our fund manager-analysts pick stocks from a pool of companies they know and track over time. Our frequent get-togethers with business leaders, along with site visits and product and service tests allow us to understand their strategy and thereby corroborate and confirm our investment decisions over time.

We closely monitor stock values. Divergences between a company’s present or anticipated intrinsic value and its stock market price thus make it possible to identify investment opportunities that offer long-term value creation.

Remaining disciplined in terms of purchase price is part of our daily philosophy. This is a key performance criterion.

Value fund managers not only buy a great stock but also buy upside potential in medium-term profitability

Isaac Chebar, European Equity Fund Manager

Value investing or why invest in discounted stocks?

Value investing means investing in discounted stocks, namely companies with a stock price below the company’s intrinsic value.

Investors can, for example, use multiple stock exchanges to compare companies between each other and/or vis-à-vis their historic valuations: Price-Earnings ratio, Price-to-Book ratio, Price-to-Sales ratio, Price-to-Cash-Flow ratio or to dividend.

Value stocks are generally overlooked and underestimated by the market at a given point in time, and the investor is hoping the stock price will revert to fair value.

Growth investing or why invest in stocks with the best growth prospects?

Growth investing favors stocks with the best top and bottom line growth prospects. Growth stocks are generally favorably priced companies with above average stock markets multiples and growth. They also have a generally low dividend payout rate because they reinvest profits to drive growth.

Growth investors buy a stock in the hope that its future intrinsic value will be higher than its current intrinsic value, thereby anticipating an increase in the stock price over the medium-term.

Managerial strength is one of the key criteria in our fundamental analysis of companies

Carl Auffret, European Equities Fund Manager