Investment principles

Invest in the 20-25 highest quality global businesses at a reasonable price

Businesses that meet three criteria:

• Sustainable cash generation;
• Ability to reinvest capital at high returns; and
• Long term runway for continued growth

Nartex invests in the best companies, facing long term favourable prospects and operating in attractive industries

These companies usually:

Have attractive market structures

• Natural monopolies and oligopolies
• Market leaders and market share winners
• They do not compete on price, but rather brand, product quality, R&D
• They provide benefits to both the consumer and the whole value chain
• Sell non-discretionary or small ticket products

They are irreplaceable and enduring

• High barriers to entry with unique IP – trademarks, licenses, patents, high switching or replacement costs
• Competitive advantages – benefits of scale, long lasting network effects
• Extremely hard to disintermediate or be disrupted

High growth industries

• They benefit from structural trends (e.g. population aging, digitization, outsourcing, passenger growth, etc.)

Management teams with talent and good corporate governance

Low leverage

Historical data, theory and experience confirm this.

Empirically, the MSCI World Quality Index (a crude way of identifying quality) has delivered almost 3x more absolute return than the global index, the value index or the growth index over the last 40 years.