Sanlorenzo: Underpromise and Overdeliver

Signs of more proactive capital allocation + low double-digit organic NOPAT growth

Look for steady compounders

Companies that underpromise (but already set a nice target) and overdeliver are the ones that make up the bulk of our portfolio. By keeping market vs. realistic management expectations in check (the so-called expectations treadmill), valuation multiples become stabler and that’s a good thing to sleep well at night.

Knowing you can buy at good prices periodically makes you maximize your future risk-adjusted returns. Whilst volatility isn’t necessarily a bad thing, it reflects retail investors not sitting on their hands and therefore it could be a signal of over-crowded investments. We don’t want to follow the herd and instead look for hidden gems… even in the large cap space, quality is a long-term value play (we’ll shed more light on how and why in this weekend’s new blog post).