Schafer Cullen Water Impact

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Strategy

Water Impact

  • Strategy Summary

Investment Strategy

  • Concentrated portfolio consisting of 20-30 stocks focused on: the water scarcity crisis; improving water quality; and global water supply
  • Pure-Play Investments in Water
  • Disciplined Value Approach
  • Global Portfolio with low turnover
Holdings
20-30
Benchmarks
S&P Global Water Index
Inception Date
Dec 31, 2020

Strategy Attributes

The Schafer Cullen Water Impact strategy was launched December 31, 2020 in partnership with Water Asset Management as Sub-Advisor. The portfolio applies a high-conviction, disciplined-value investment approach to owning quality, pure-play, global water-related companies. These companies are focusing on solving the water scarcity crisis by improving water quality and global water supply.

The strategy is built upon a rigorous fundamental investment process that is focused on valuations, management quality, business model strength, earnings growth and free cash flow generation.

Pure-Play Investments in Water

The strategy invests in companies dedicated to solving the water scarcity crisis. Water-related investment themes include:

  • Increasing Water Supply
  • Improving Water Quality & Treatment
  • Supporting Regulatory Changes
  • Improving Efficiency & Conservation
  • Promoting the Infrastructure Investment Super Cycle
  • Improving ESG Implementation


Disciplined Value Approach

Following Schafer Cullen's decades-long investment approach, this strategy also seeks to invest in companies with low price/earnings, low price/book and attractive dividend yields.

High-Conviction Global Portfolio

The strategy boasts a concentrated portfolio of approximately 20-30 water-focused companies, covering a spectrum of industries within the Water sector.

Water Asset Management will donate a portion of the revenue received from the strategy to WaterAid and their mission to improve access to clean water, hygiene and sanitation in the world's poorest communities.*

*Marc Robert, COO of WAM is presently the Chair Board of Trustees of WaterAidAmerica, a global charity focused on providing access to safe water and sanitation. CCM is not affiliated with WAM or WaterAid

Investment Process

The Schafer Cullen investment team relies heavily on fundamental research as part of its investment selection process. Because the firm has a disciplined value investment philosophy, a rigorous review of company fundamentals vs. industry peer and the overall market is an important part of the investment process.

Jim Cullen, Portfolio Manager

Screen for Value:

  • Utilize a global network of water industry, regulatory and policy contacts to identigy investment ideas
  • Identify potential developments within the water industry such as M&A, Spinoffs, IPO's, etc
  • Develop and prioritize themes within industry subsectors
  • Research and screen investment ideas globally for valuation opportunities

Fundamental Research:

  • Review opportunities based on ESG policy guidelines, criteria and ability to positively impact water quality and availability
  • Identify individual companies best leveraged to investment themes
  • Evaluate and model identified companies to access fundamental drivers
  • Engage with company management, customers, competitors and distributors

Portfolio Construction:

  • Approximately 20-30 positions
  • Precise entry and exit prices are established
  • Position sizes are based on risk-adjusted price targets
  • Portfolio is optimized based on conviction and thematic exposure
  • No more than 10% in any one position

Portfolio Monitoring:

  • Proactive dialogue with company management teams to ensure investment thesis is realized:
    • Board communication
    • Proxy contest
    • Tender offer
  • Rigorous stop loss discipline
  • Portfolio and individual investments reviewed daily by portfolio manager and investment team

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