Performance Preservation Capital Partners

Reliable Predictive Investment Management

Principles of Investing

PPCP have developed a series of Investment Principles that guide how we manage investors’ money.

These principles are not new, but are outlined to clarify the approach that we use when we assess investments and make investment decisions.

1) Capital Preservation

The fundamental principle is Capital Preservation and for every investment we carefully consider:

- the probability of both making or losing money;

- the potential that we may be wrong on our appraisal of that investment; and

- our exit strategy, whether that investment goes up or down.

We make investment decisions after considering many factors, and invest only after making considered assessment of risk and return. All through this process Capital Preservation is critical.

2) Rigorous Methodology

We have sophisticated modeling technology that enables us to assess risks based on multivariate analysis. Our “spider-web” graphic summarises some of this multivariate analysis for investors.

We also perform detailed fundamental research of each investment to ensure that we understand the drivers of the investment, to assess:

- the various risk factors that we need to work in our favour for that investments to rise in value; and

- the factors that we are trying to identify that could cause the investment to lose value.

3) Evaluation of Investments

We do not assess investments as they are presented to us. We break them down into their components so we understand how they work.

This is designed to get behind the financial engineering, hidden risks, misstatement of position and other techniques that companies can employ to “window dress” their results. Whilst some companies use various techniques to hide “bad news”, surprisingly some companies can do the opposite - finding “hollow logs” to hide profit for future years!

An example of this is the use of leverage within investments to change the risk return/profile of that investment. Company returns can be easily manipulated by changing leverage, yet the risk analysis is not always assessed properly. This was a key factor in the GFC, that needed to be evaluated but was basically overlooked by the market at the time.

Performance Preservation Capital Partners Pty Ltd

Reliable Predictive Investment Management

ACN 604 104 510

Authorised representative under Australian Financial Services Licence no. 287730

Sydney Office: Level 21, 6-10 O'Connell Street, Sydney NSW 2000

Phone: +61 2 9098 8887

Melbourne Office: Level 3, 461 Bourke Street, Melbourne VIC 3000

Phone: + 61 3 9654 3522


This document has been prepared by Performance Preservation Capital Partners (PPCP) ACN 604 104 510, AFSL No 287730. It is general information only and is not intended to provide you with personal financial advice or take into account your personal objectives, financial situation or needs. You should consider, with your financial adviser, whether the information is suitable for your circumstances. To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information. The IM for the relevant fund issued by PPCP, should be considered before deciding whether to invest in that fund. The IM can be obtained from PPCP. PPCP does not guarantee the performance of any fund or the return of any investor's capital. The total return shown for each fund has been calculated using exit prices before taking into account any ongoing fees and assuming reinvestment of distributions. No allowance has been made for taxation. Past performance is not an indication of future performance.