At TWC, we have built our investment approach on a foundation of clarity and purpose. We believe that without a clear belief system or set of guiding principles, achieving focused investment outcomes is impossible. Our philosophy is grounded in a well-defined view of the key elements that drive the overall stock market and a company’s share price in the long term. These elements are meticulously integrated into the way we build portfolios for our clients. Our comprehensive framework and meticulous process enable us to systematically identify, qualitatively assess, and actively invest in these exceptional businesses.
Not all growth leads to wealth creation. In fact, growth in a company’s balance sheet (Investment growth) can have both positive and negative implications for a company’s share price. True shareholder value, or “wealth creation”, occurs when a company’s achieved economic returns sustainably exceed its real cost of funding, known as the cost of capital (CoC). Conversely, economic returns that consistently fall below the cost of capital reflect management decisions that erode shareholder wealth.
At TWC the concept of wealth creation is intrinsically linked to the industrial lifecycle. Recognising where a company stands in its lifecycle is crucial, as the priorities and challenges of early-stage companies differ significantly from those of more mature businesses. Our investment process systematically categorises companies into five lifecycle stages based on their RROI (Real Return on Investment) and investment growth profiles.
At TWC, we have built our investment approach on a foundation of clarity and purpose. We believe that without a clear belief system or set of guiding principles, achieving focused investment outcomes is impossible. Our philosophy is grounded in a well-defined view of the key elements that drive the overall stock market and a company’s share price in the long term. These elements are explicitly integrated into the way we build portfolios for our clients.
At TWC, we have developed a proprietary investment framework that transforms raw accounting data for more than 20,000 companies globally into a powerful economic return measure known as Real Return On Investment (RROI). This RROI framework, unique to TWC, equips us with a clear information advantage, allowing us to analyse management teams, companies, and investment opportunities with accuracy and precision.
Our framework is based on our distinct intellectual property, which significantly surpasses traditional accounting measures such as EPS, ROE, ROCE, and ROA. The benefits of this advanced approach include:
By making critical adjustments to "as reported" accounting data, our RROI framework provides a more accurate measure of corporate performance. This enables us to conduct superior fundamental analysis, providing deeper insights into a company’s true economic return and long-term potential.
Our RROI framework offers a universal basis for comparability across time, borders, and industries. This point-in-time estimate of a company's achieved inflation-adjusted ROI allows us to assess companies on an even playing field, regardless of their geographical or industry-specific differences.
One of the most powerful aspects of our framework is the Embedded Expectations methodology. This sophisticated and pragmatic valuation approach directly links corporate performance with the market expectations, providing a highly differentiated and insightful perspective on a company’s valuation.
At TWC, we pride ourselves on our time-tested investment process that has consistently produced reliable and predictable outcomes over the past two decades. Our approach is grounded in evidence-based analysis, leveraging our unique fundamental insights to build robust portfolios.
Our investment process is driven by four key performance indicators (KPIs) that strike an optimal balance between fundamental, behavioural, and technical factors. These KPIs enable us to conduct a comprehensive analysis of companies, ensuring we identify those with the greatest potential for long-term growth and shareholder value.
Wealth Creation
Embeded Expectations
Business Momentum
Technical Strength
At TWC, our investment process is designed to provide a systematic and qualitative assessment of companies based on our four key performance indicators (KPIs).
The tWC’s AlphaScore is a scoring system ranging from 1 (worst) to 5 (best), representing an aggregate score derived from the individual scores assigned to each KPI for every company in our investment universe.
Our portfolios are typically biased towards companies with a higher overall AlphaScore, reflecting our investment team’s fundamental conviction. For a company to be included in our portfolios, it generally needs to score well across all four KPIs, ensuring consistency and predictability in our investment outcomes.
This rigorous approach enables us to build evidence-based investment portfolios that are resilient, forward-looking, and aligned with realistic market expectations. By combining these KPIs, which balance slower-moving fundamental indicators with faster-moving behavioural ones, we can achieve a reliable alpha profile, delivering superior investment outcomes with lower volatility.
At TWC, we pride ourselves on a team-based investment approach, ensuring that our strategies benefit from the collective expertise and insights of our seasoned professionals. Our investment process is implemented through a disciplined, four-stage periodic investment cycle, tailored to meet the specific demands and objectives of the underlying portfolio investment strategy.
Our investment process is dynamic and adaptable, reflecting the ever-changing landscape of financial markets. This means that every company in our portfolio must continuously demonstrate its value and earn its place and weighting.
Step 1. Define the Appropriate Investment Universe
We begin with an investable universe that aligns with the objectives of the fund or client account. This universe is carefully curated to meet our stringent criteria for market capitalisation and liquidity, ensuring we have a robust foundation from which to select investments.
Step 2. Systematic Screening & Scoring
For each strategy, companies within this universe are systematically scored and ranked based on TWC’s four key performance indicators (KPIs): Wealth Creation, Embedded Expectations, Business Momentum, and Technical Strength, all within the context of the industrial lifecycle. This ranking process helps us identify the stocks that align most closely with our target KPIs and overall AlphaScore, allowing us to narrow our focus to those that exhibit the strongest investment potential.
Step 3. Qualitative Due Diligence
A focused list of companies identified in the screening and scoring stage undergoes thorough qualitative due diligence. Our investment team is dedicated to scrutinising only those companies that meet our well-defined criteria. During this stage, we conduct evidenced based fundamental analysis, considering various factors such as the company’s position in its industrial life cycle, management’s track record of wealth creation (requiring a deeper analysis of TWC’s observable RROI metrics), peer comparisons, assessing whether the company has a sustainable competitive advantage, or a “moat” as it is conventionally known, and critical issues around sustainability, reinvestment opportunities, industry structure and dynamics, compensation structure, and suppliers and competitor dynamics.
Our investment team asks a series of critical questions to gain a comprehensive understanding before including a company in the portfolio. These questions are closely aligned with our distinct KPIs to ensure consistency and precision in our evaluation.
Step 4. Portfolio Construction
Insights gained from the due diligence phase inform trade suggestions, which are then discussed and finalised during the portfolio construction meeting. In this phase, we optimise our portfolios based on AlphaScore and market capitalisation while controlling for risk. This structured approach ensures that our investment decisions are well-informed and strategically sound, leading to robust and resilient portfolios.
Step 5. Active Capital Recycling
Existing holdings are continuously forced to earn their place and weighting in TWC portfolios
