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ORLOG CAPITAL MODEL

The Orlog Capital Model is the integration of our investment philosophy with our operations thereby aligning:

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  • The investment team with our investment style and performance objectives

  • The fund manager with external investors

  • Capital with opportunity

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The four key areas of the Orlog Capital Model are:

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  • Contrarian

  • Fundamental and Long Term

  • High Conviction

  • Interest Alignment

Contrarian

Investment Philosophy

  • Our core investment identity is based on being contrarian and seeing the world differently to others

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  • We like to look where others aren't looking, to seek out mispriced opportunities in underappreciated and often hated companies, to buy into short term volatility when there is long term value to realise

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  • We do our own deep dive fundamental research on companies which often results in an understanding very different to the popular Street views

Operational

  • We prefer to hire our investment team members from outside the funds management industry.  Our belief is smart individuals with no preconceived notions on investing are the ideal canvas to absorb our unique style of thinking

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  • Our analysts must continuously prove the quality of their thinking as well as investment returns to remain with the firm

Fundamental and Long Term

Investment Philosophy

  • Our focus is on understanding businesses at the fundamental level - cashflows, asset values, competitive moats, etc.  We try to estimate intrinsic value over the long term without relying on too many assumptions

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  • The types of investments we find attractive vary greatly and includes both value and growth companies.  Our style of investing is difficult to classify but our core principle is: the price paid is the main determining factor of the risk borne and the expected return outcome

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  • We are patient in our approach and are prepared to invest for long periods of time

Operational

  • A large portion of the investment team bonus is paid in fund units which vest over multiple years.  This aligns their perspectives with sustainable long term results

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  • Investors in the fund have an initial lockup period of one year and fund dealings occur only once every quarter with a minimum of three months advance notice.  This aligns our capital base with our opportunities set

High Conviction

Investment Philosophy

  • We typically only hold 15-25 ideas within our portfolio with our best ideas dominating the weightings

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  • Our fund is unconstrained in its cash positioning and the balance is likely to be high when opportunities are scarce/the market seems overheated

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  • When opportunities are abundant/oversold markets, our invested position will be high and the fund may even take on limited leverage

Operations

  • The majority of an investment analyst's compensation is from their bonus which is linked to individual stocks and the performance of the fund

Interest Alignment

Investment Philosophy

  • Assessing internal share ownership, management compensation structures and understanding historical capital allocation decisions is an important part of our investment process

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  • We analyse the investor base and holding changes in detail.  Presence of certain specialist investors and/or activists may influence our positioning

Operations

  • Management are the biggest investors in the Orlog fund with the founder and family holding majority of their wealth in fund units

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  • Our focus is on performance, not asset accumulation.  The fund team will always be significant investors in any current or future strategy we offer

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