Our approach to investing is based on the belief that superior long term equity performance is driven by above average, sustainable earnings growth.

Industry structure and the company’s relative position within the industry are critical determinants of that performance.

The economy, industry and markets are dynamic and constantly subject to change. A company’s ability to cope with such changes is greatly enhanced when the competitive structure of the industry in which it operates is favourable. Thus this is the focus of our research.

Our philosophy has delivered strong returns to our clients over the medium and longer term. As we are all investors in our funds, our success is linked to our client's success.


We take a longer term view when researching ideas and our focus is on generating sound investment ideas utilising a highly experienced team with in-depth industry knowledge.

Idea Generation
Industry Analysis
Micro Industry Segmentation
  • Growth Outlook drivers
  • Relative Concentration
  • Value Chain Analysis
  • Barriers to Entry & Substitutes
Company Analysis
In Depth Company Analysis
  • Micro Industry Positions
  • Competitive Advantage
  • Corporate Strategy
  • Valuation
Portfolio Construction
Industry Analysis

Understanding industry dynamics is our key focus. Our research identifies the key industry structural challenges that all businesses face. Understanding where the bargaining power resides helps identify where value is created or lost.

Our industry analysis can broadly be broken into stages:

  • The industry is segmented into its micro-industries. A micro-industry is defined by its unique value chain.
  • We identify the growth outlook drivers, which can be broadly divided into political, economic, social and technological factors. This allows us to identify micro-industries which can deliver sustainable, above market growth.
  • The competitive dynamics within a micro-industry is assessed. This includes assessing the relative concentration of an industry.
  • The relative bargaining power of the companies in the value chain of a micro-industry is assessed.
  • The Barriers to Entry of a new participants trying to enter a micro-industry is analysed.
Micro Industry Segmentation
Growth Outlook Drivers
  • P.E.S.T
  • Growth Tenure
  • Global Dimensions
Relative Concentration
  • HHI Trend & Absolute
  • Competitive Advantage
Value Chain Analysis
  • Analysis of Suppliers & Customers
  • Barriers to Backward/Forward Integration
Barriers to Entry & Substitutes
  • Margin Trend
  • IP/Legislative Cost Curve
  • Scartiy of Assets
  • Vertical consolidation
Company Analysis

The in-depth company analysis builds on our industry work and further identifies a companies:

  • Position within its micro-industry, including trends in share and robustness of market positions.
  • Particular competitive advantages. This can be derived from scale, proprietary technology, intellectual property, brand strength, innovation or uniqueness of a business model.
  • Corporate Strategy including; the uniqueness of the business model or resources, the level of industry or market focus, the company’s sucess in exploiting industry dynamics and its track record in delivering shareholder value.

Arnhem applies a robust assessment of valuation, using four separate valuation methodologies, where applicable. These are:

  • An assessment of the relative growth of a company against the growth implied by its price to determine any mispricing.
  • A measure based on historic Cash Flow Return on Investment (CFROI) and the expected returns using consensus estimates implied by the current stock price.
  • A Break-up or Sum-of-the-Parts analysis, using international and domestic industry peers.
  • A Discounted Cash Flow (DCF) analysis to deliver an absolute value or intrinsic value of a company using our internal forecasts of future free cash flows