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Hermes US All Cap

Home / Capabilities / Equities / Hermes US All Cap

Objective: aiming to provide long-term capital appreciation by investing primarily in equity or equity related securities of small, medium and / or large sized companies domiciled in the US, or which derive a large proportion of their income from US activities. These are primarily listed or traded in the US or Canada.

"Flexibility to invest in high quality stocks, unconstrained by market cap."

Michael Russell, CFA

Lead Portfolio Manager

Why Hermes US All Cap?

  • High quality: we define quality as companies which we believe possess a durable competitive advantage. Such companies often exhibit high market share, industry-leading margins and good cash-flow generation bought at a discount to intrinsic value.
  • Flexibility: to invest across the market capitalisation spectrum.
  • Bottom up: focus on adding value through stock picking across the market, rather than concentrating holdings in a few industries.
  • Stable returns: investments in high-quality businesses should help performance in down markets.

Investment approach

Hermes US All Cap invests in high-quality companies: those that we believe possess a durable competitive advantage. We value consistency and stable, growing revenues and cash flow. Over time, we believe that companies exhibiting these characteristics outperform – importantly, with less risk.

The team’s investment criteria are based on company fundamentals, not macro-driven. We have a watchlist of about 250 companies that meet our quality criteria, part of which have been built up over the past 10 years and supports timely investment when valuations are appropriate. A detailed company report and cash flow model is produced for each potential investment.

The strategy utilises a composition review, an optimisation tool which is run monthly, incorporating quantitative and qualitative data on each of our companies to effectively manage position sizes.

Risk management

The majority of risk in our portfolio comes from stock selection – the team’s core competency – and we regularly test for unintended factor risks. Hermes EOS provides us with proprietary data about environmental, social and governance risks that may influence the performance of companies.

Past performance is not a reliable indicator of future results and targets are not guaranteed.