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GAM Star (Lux) European Momentum

Reasons to Invest

Academically proven

The pursuit of sustainable, repeatable returns, based on fundamental differentiation in stock prices, is an approach proven by historic performance and academic research.

Alpha generation

The analysis of company fundamentals and changing trends in earnings prospects can highlight alpha opportunities.

Potential for attractive returns

The team’s preference for stocks with visible earnings streams, due to structural opportunities, means the fund is well positioned to deliver positive returns irrespective of market environment

Favourable outcomes over time

Times when share prices and earnings momentum have become disconnected have historically led to opportunities for momentum recovery and sustainable returns.

Our Edge

Successful team approach

The non-directional equity team has applied their disciplined and consistent approach to alpha generation since 2002, and has established a long-term, proven track record.

Ability to anticipate earnings revisions

A wealth of experience, extensive local networks and long-term knowledge of markets and companies provides an edge in anticipating earnings revisions.

Robust stock selection

A clear focus on intensive fundamental stock analysis seeks to ensure that only calculated, alpha-generating positions are chosen for the portfolio.

Strict focus on risk management

A methodical and consistent risk management approach seeks to protect the portfolio during times of market volatility and economic turning points.

Philosophy and Process

Investment Philosophy

The team believes that share prices reflect all available market information, which is also reflected in analysts’ consensus on earnings expectations. By correctly anticipating earnings surprises (ie changing expectations on future profits), returns can be captured as prices move in reaction to news. The ‘herd mentality’ of market participants means consensus views change slowly, therefore the team seeks to stay ahead of the crowd, forming independent 12-18 month views on companies and industries. By seeking to buy stocks they believe will beat consensus expectations during the investment cycle, they aim to deliver consistent returns irrespective of market conditions.

Investment Process

Methodical idea generation and fundamental analysis provide robust stock selection. Quantitative screening of 1,000+ European stocks is combined with research to identify stocks with desirable characteristics based on earnings revisions, valuation and price momentum. The team performs bottom-up, fundamental analysis on potential investments to understand factors influencing the P&L, balance sheet and cash flow. They cross-check their views against broker consensus, industry peers and contacts and select stocks likely to exceed earnings targets. Trades are sized according to conviction, volatility and liquidity to build a diversified portfolio of 40-80 stocks with an average weight of 1.5-2% per stock. Risk management includes thorough pre-trade controls, while a dedicated risk manager has an independent supervisory function.

1. Idea generation

  • Quant screen (StarMine)
  • Targeted consensus screen
  • Company meeting

2. Stock selection

  • Fundamental analysis
  • Company contacts

3. Portfolio construction

  • Pre-trade risk analysis
  • Sizing of positions
  • Continuous assessment of portfolio robustness

4. Risk management

  • Pre-trade risk controls
  • Daily independent risk oversight

Investment Team

Gianmarco Mondani, head of the non-directional equity team, has been successfully managing GAM Star (Lux) – European Momentum since its inception in 2003. Together with co-managers Roberto Cantaluppi and Paolo Longinotti, the team has a total of over 60 years’ combined investment experience.

The team works collaboratively with an additional seven investment professionals to analyse changes in the drivers of company results and analysts’ perceptions across global sectors and markets, as well as the timing of when these might materialise.

The team is based in Lugano, Switzerland and were formerly Arkos Capital SA, which was acquired by GAM in July 2012.

Our edge lies in our ability to identify stocks that will surprise by exceeding or falling short of analysts’ expectations
Gianmarco Mondani, Investment Director.

Fund Information

Key Risks

Counterparty Risk / Derivatives

If a counterparty to a financial derivative contract were to default, the value of the contract, the cost to replace it and any cash or securities held by the counterparty to facilitate it, may be lost.

Equity

Investments in equities (directly or indirectly via derivatives) may be subject to significant fluctuations in value.

Leverage Risk

Derivatives may multiply the exposure to underlying assets and expose the Fund to the risk of substantial losses.

Capital at risk

All financial investments involve an element of risk. Therefore, the value of the investment and the income from it will vary and the initial investment amount cannot be guaranteed.

Resources

Fund Profile - GAM Star (Lux) European Momentum

Risk management at GAM

Contacts

GAM Star (Lux) SICAV – European Momentum is a sub-fund of GAM Star (Lux), domiciled in Luxembourg, registered office at 25, Grand-Rue, L-1661 Luxembourg, each an umbrella company.