Strategy

Philosophy

St. Petri Capital works with an investment philosophy that reflects our conviction and experience over the last 30 years.

We believe structural changes will bring change at a speed, scale and force unlike anything we have experienced before, making linear thinking and traditional investing increasingly inaccurate. These changes will affect the very essence of our core values and human experience while disrupting existing industries and related value chains. The business models of many industries will be transformed as access to technology spreads rapidly, and radical system-wide disruption across sectors is now happening within the space of only a few years.

Our investment process is tailor-made to capitalize on these changes.

Process

The essence of our investment process is to understand the dynamics of structural change and their implications for companies’ future cash flows. Based on the current implicit expectations which are priced into the share price, we seek to understand the markets’ expectations and the possible reasons why the implications from structural changes may be mispriced. As the final step, we try to understand the timing and predict when market expectations will start to take our expected implications for companies’ future cash flows into account, resulting from these structural changes.

Identifying Structural Growth

St. Petri Capital is founded on the belief that thematic research will provide high-conviction investment ideas, better risk-adjusted returns and diversification for our clients. Through our thematic research, we differ significantly from traditional sector and country investors.

In our daily work, we focus on understanding the structural changes that are shaping current and future value chains. Having analysed the implications of structural changes, we typically define a list of 10 to 15 long and short investment themes. A potential new theme is subject to research and rolling discussions that may last from a few weeks to several months. In our research work, we consider what type of analysis validates the idea, what counterarguments and weaknesses exist and how investable the theme is. Our main goal is to invest into a theme before it becomes widely followed. While the horizon will differ across these themes, generally we remain invested between 6 and 24 months.

Eventually, each theme must be validated. We meet with 300 to 400 companies and industry specialists each year and explore new opportunities by attending field trips and conferences. Each of these interactions raise potential questions: Is the value chain changing? What expectations are currently implied in share prices? What are the catalysts that will drive future share prices? And, how does a potential new investment change the overall risk-reward profile of our portfolio?

Stock Selection Process

Essentially, a theme works as a filter for stock selection. Some 30 years of equity research has given us a broad exposure to companies and their decision makers. Once a stock meets our thematic investment criteria, the share price potential is measured through discounted cash flows.

In our models we can see the implied assumptions currently priced in. Incorporating thematic drivers into these models helps us identify the share price potential. If the potential is satisfactory versus the risk that the stock will contribute to the portfolio, and a clear catalyst can be identified, the company is added to the portfolio, either on the long or short side.

Identifying and studying themes help us select better stocks.

Risk Management

We have the flexibility to pursue our best ideas across sectors, market capitalization, countries and regions. Our portfolio is not risk free, however. Multi-dimensional risk management is the key part of our investment process.

Traditional risk metrics such as beta, standard deviation and correlations with other metrics help us understand and hedge the unintended risks. While specific risks may not directly affect our investment themes, they may still have an indirect impact on our fund. When backward-looking risk models are predicted with less confidence, for example in a situation of crisis, they lose their ability to forecast. Therefore, we also use pro-active risk models.

“If/when” scenarios, “maturity of themes”, correlation of themes, as well as limits on volatility are significant parts of our risk-management process. The goal is to create a portfolio that carries significantly lower risk than that of the overall market.

Legal Disclaimer

Welcome to St. Petri Capital A/S’ (hereinafter referred to as the “Company”) website. The aim of the website is to provide you with information on the Company and our work with providing investment advice in relation to the hedge fund, Kapitalforeningen Wealth Invest (compartment: St. Petri L / S AKL). As such the website and its content is available solely for your information and interest and should not in any way be considered sales promotion material.

The website does not provide you with advice or recommendation of any kind and you should not rely upon this site as the basis for any decision or action. Nothing on this website constitutes investment advice or legal, tax or other advice, and any recommendations that may appear on this website does not reflect and has not been based on the investment objectives, financial situation, experience or particular needs of any specific recipient. The website and its content is as up to date as is reasonably possible and may be subject to revision in the future. You are advised to consult professional advisors in the appropriate field with respect to the applicability of any particular aspect of the contents.

The Company makes no representation or warranty, express or implied, as to the website’s and its content’s completeness, accuracy, reliability, timeliness, availability, uninterrupted or error free functionality and compliance with applicable laws or that this site or the server that makes it available are free of viruses or other harmful components.

The Company shall not have any liability whatsoever for losses howsoever arising, directly or indirectly, from any use of this website or its contents or otherwise arising in connection therewith. This website may contain links to websites operated by other parties. The Company has no responsibility or control over the content or operation of such sites and shall not be liable for any damages or injuries arising from that content or its operation. Such links do not imply the Company’s endorsement of material on any other site. The Company provides links to other websites as a convenience to users, and access to any other websites linked to this website is at your own risk.

The content of this website is only addressed to and directed at persons in Denmark who are “professional clients” or “eligible counter-parties” within the meaning of Article 4(1)(10) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II) (“Professional Clients”). By entering this site, you represent and warrant to the Company that (i) you are a Professional Client; and (ii) you have read and agree to comply with the contents of this legal disclaimer.

By entering this site, you acknowledge and agree to this legal disclaimer and will be taken to have represented, warranted and undertaken that you have read and agree to comply with the contents of this. If you do not agree to this, do not use the site.