Strategy overview

Investors have exposure to today’s winners, but they do not have exposure to the winners of tomorrow. Our strategy seeks to identify less-discovered winners of tomorrow and provide investors with focused exposure to them.

We focus on smaller, developed market companies with market caps between $1 and $10 billion. We apply proprietary, bottom-up research and deep sector knowledge to identify secular winners with significant upside. Each investment is a leader in its market niche, has an aligned management team, addresses a large market that affords years of growth ahead and has sustainable competitive advantages.

Our intrinsic value approach leads us to invest in companies when they are priced for significant upside and limited downside based on our assessment of their future cash flows. The portfolio is high conviction with 10–20 liquid, developed market companies. Risk mitigation over the long run is a chief concern for us. Accordingly, each company we invest in is based in a developed market, is liquid, and has limited exposure to externalities, whether ESG, competitive, financing, or business risks. Since our inception in 2018, over 80% of our exits have made money with the strategy outperforming the MSCI Small Cap Index.

Why invest with Blue Ocean?

Our founder and investment decision-maker began his investing career at Brinson Partners in 1996. He began as a technology analyst with a strong focus on philosophy and process, developing the application of intrinsic value methodologies to technology investing. This moved the sector from a long-term detractor to a significant contributor to the firm’s clients. During this time, he led the firm in value-adding ideas while identifying and investing in many of today’s leading companies (and many companies that were acquired at significant gains). It was this experience that led directly to the formation of the strategy at Blue Ocean. Our founder is the sole shareholder of the firm and has invested most of his liquid net wealth in this strategy alongside the firm’s clients.

We realise that to be successful we must be different. For this reason, we focus on companies that are under-researched and less well-known in the market. We do all our research and take a long-term approach to our company analysis and valuation. A long-term horizon means that our intrinsic valuations change when our understanding of the long-term changes, not due to news or market price fluctuations. Market prices are more volatile, allowing us to react to opportunities present in the market, buying when companies are priced at a significant margin of safety to their fair value, and selling companies that fully reflect their potential. This long-term focus means that our strategy is inherently more volatile than traditional approaches as controlling volatility requires a shorter-term focus. Our philosophy also results in highly concentrated portfolios with significant long-term upside potential.