ACML offers its Master Portfolio to family offices, allocators and high net worth clients. ACML employs a value investing philosophy to construct a long-biased equity portfolio with approximately 20 positions, with the aim of compounding returns over the long-term. ACML seeks out superior businesses with “synthetic leverage.” These companies have advantaged business models and can safely leverage alternative third-party capital or operations to generate significant incremental cash flows, which can be reinvested at high rates of return over long runways.
ACML believes such companies can compound in value over many years, especially when run by talented managers who are aligned with shareholders.
Over 70% of our portfolio is invested in companies that have synthetic leverage.
Synthetic Leverage is essentially the use of non-recourse external capital at no (or low) cost to generate additional returns.
Examples Of Synthetic Leverage
Public holding companies
Opportunities for significant value creation through intelligent capital allocation, as market often does not fully price in the value of subsidiaries
Invest insurance “float” in addition to their own capital to generate higher returns on investments
Alternative asset managers
Invest 3rd party assets under management in addition to their own capital to generate significant recurring fees to enhance returns on investments
Capital efficient – leverage the work/inventory/costs of others
Powerful winner-take-most network effects
Leverage business partners to collect high margin recurring royalty income
Companies with ancillary income
Leverage strategic relationships with customers to cross-sell high margin services
The opinions expressed herein are those of the firm and are subject to change without notice. The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions, and may not necessarily come to pass. Any opinions, projections, or forward-looking statements expressed herein are solely those of author, maydiffer from the views or opinions expressed by other areas of the firm, and are only for general informational purposes as of the date indicated.