Our Philosophy
In taking a page from academia, we believe that a sound investment philosophy should begin by making certain assumptions or postulates about the market, and then seek to derive logical conclusions that follow these assumptions.
In describing the Cambiar philosophy, we begin with the primary observation that the capital markets are relatively efficient over the long term, but prone to bouts of myopia and excess over shorter-term time periods. The greater the volatility of perception within a given sector, the wider the dispersion of returns, and the more opportunity for an active manager such as Cambiar to add value.
Stocks may be mispriced for a variety of reasons – low investor interest, excessive negative sentiment towards the sector, or the incorrect differentiation between transitory vs. terminal headwinds facing the company. The key focal point for Cambiar is to understand why a company stock price is lagging, but more importantly – is there an underlying inflection point in their business that will enable the stock price to be revalued upwards? While price sensitivity at the point of purchase can provide a good backstop, Cambiar also recognizes the opportunity cost of allocating capital to a stock that does not have a notable catalyst over a forward 1-2 year timeframe.
Stocks may be mispriced for a variety of reasons – low investor interest, excessive negative sentiment towards the sector, or the incorrect differentiation between transitory vs. terminal headwinds facing the company. The key focal point for Cambiar is to understand why a company stock price is lagging, but more importantly – is there an underlying inflection point in their business that will enable the stock price to be revalued upwards? While price sensitivity at the point of purchase can provide a good backstop, Cambiar also recognizes the opportunity cost of allocating capital to a stock that does not have a notable catalyst over a forward 1-2 year timeframe.
Cambiar attempts to add value through active management – we believe that one must look different than the index in order to outperform. All portfolio decisions are based on our in-house research approach; the Cambiar investment team is focused on understanding where value is eroding and accreting within their assigned sectors, with the goal to allocate capital to the latter. This bottom-up approach will often result in sector and individual holdings that differ from the underlying index.
