The Aescap funds have focused portfolios of around 20 companies each. This enables us to out-performance our benchmark, the Nasdaq Biotech Index (NBI). Investment decisions are based on thorough research, fundamental analyses and advanced company valuations based on the calculation of the net present value (NPV). In the biotech sector, such an analysis especially encompasses the product portfolio, patent protection, product development risks, market entry barriers, competition and the expected market development. But perhaps even more vital to our process are the serious efforts we undertake to understand the strengths and weaknesses of a company’s management, track record, team dynamics, and their view on the future of the company and the markets they serve.
We believe companies can truly make a difference if their products differentiate themselves from their competitors. We therefore actively search for companies that develop next-generation medicines based on well patented ground-breaking technologies. We are most interested in medicine that treat diseases with a high unmet medical need and medicine that lower the overall cost of care.
In our experience, a management team with the right characteristics consistently outperforms the market. To that end, we look for outstanding and ambitious management teams with an excellent track record and a clear vision of the future.
High growth companies
We only invest in companies that are actively searching to expand their business in terms of in- or out-licensing opportunities around their product pipeline. These efforts do not only drive growth, but they also reduce the company’s exposure to risk.
Diversification within our focus
Our focus is on the highly specialized biotech and life sciences market. This is a market we understand and know very well due to our team’s decades of expertise in this field. Within this focused approach, we diversify over diseases, geographies and stages of company development. This we we limit risk and maximize profit.
From a pool of over 1000 publicly traded Life Sciences companies in Europe and the U.S., we identify those companies that meet the above-mentioned criteria and which shares are being traded at a discount to their intrinsic value. We believe that by managing focused portfolios of around 20 companies, we can outperform our benchmark. By being able to select 1 out of 50 companies we can choose from and follow them in every detail. By applying a disciplined buy and sell strategy we prevent to go along with a bubble if and when it might appear.
Buy and sell discipline
We actively monitor the companies that we identify as ‘high potential’ and only invest in them when they meet our calculated ‘maximum entry prices’. We sell them when they have reached our re-balance price. This disciplined buy and sell approach allows us to make rational decisions.We knowwhen to step in after a bubble has burst and avoid the risk of going along with a bubble.
We focus our efforts on finding future outperformers to maximize our returns. Rather than spreading our portfolios over a large number of investments and losing sight of individual investments, we hold concentrated portfolios of around 20 companies for each fund. This ensures we are consistently on top of developments as they occur within each of our carefully selected portfolio companies.
We put our money where our mouth is
A stringent approach and staying true to our values has been the basis that led to our performance. Our confidence in our strategy is reflected by the fact that the Aescap investment team has invested over € 25 million in the Aescap funds.