Why investing with some level of discomfort is healthy for long-term returns

A 25-minute watch

Matthew Beddall, CEO of Havelock London and manager of the LF Havelock Global Select fund sat down with Andy Brown (before the latest lockdown) to discuss how he and his team approach value investing, a style that may well be set for a strong 2021.

Matthew stressed that his team’s mindset when investing is akin to that of a private investor, looking over a 10-year horizon. With this in mind, he is happy to invest in more cyclical businesses and stick with them through the tougher times.

“Woven into the way we think about investing is a willingness to invest in businesses where there is some discomfort, and in the long run we see us being more rewarded than if we were flocking to things that feel comfortable,” he explained.

Matthew also challenged some misconceptions around what ‘value’ investing actually is, and how investors can go about finding the right valuations.

“There is a risk that the phrase ‘value investing’ has been hijacked by a narrow definition whereby its just about buying companies at a low price-to-earnings ratio or a low price-to-book ratio,” he explained.

“At Havelock we are very willing to buy a growing business with informed options to on what the stock is worth based on realistic views about what potential growth might look like. My starting point is to ask what do you mean by value? What is a value investor? It’s more than just a narrow definition based on one or two price ratios”.