The business model and investment philosophy of Sephira Asset Management are based on four foundational principles. These principles are a distillation of the universal investment wisdom and experience we were able to gather. The principles serve as a guiding light for our investment activities.
We are advocates of the founder-owner-operator business model, and invest a significant portion of our net worth with the fund. In addition, the fund’s cost model assumes no fixed management fees, with an investment profit-sharing arrangement (compliant with ESMA performance fee guidelines) constituting the only source of remuneration for the managers. These two factors limit potential conflicts of interest between the fund managers and investors, as well as disincentivize excessive risk-taking by the managers.
Our primary investment objective is to compound capital through positive absolute returns achieved without following a specific external benchmark. Rigorous downside protection measures are utilized on the regular basis. The capital will only be invested if the identified opportunities generate attractive risk-adjusted returns.
We intend to commit capital only if an investment opportunity offers a sufficient margin of safety understood as a discount to our estimate of the intrinsic value of the investment. This principle serves as a protection against potential forecasting errors made during investment due diligence, as well as provides a safety buffer against adverse moves of market risk factors.
We aim to structure the fund’s portfolio so that the investments have a limited downside (enabled through the margin of safety investing, cash buffer, and portfolio hedging) and uncapped, potentially unlimited upside (investments in growing companies with optionality). The investment opportunities will be assessed based on the perceived upside-to-downside ratio so that the option-like qualities of portfolio returns are maintained over time.