About Us: Profile
Consistent with its long held beliefs, the investment approach is value orientated, which means the research effort is focused on identifying good quality assets that are priced at below intrinsic value. Fountainhead defines intrinsic value as the discounted value of expected future cash flows.
Value is always best when no one wants the asset. The firm tries to stay out of popular sectors that tend to become overdeveloped or overpriced.
Fountainhead tries to acquire properties that have a competitive advantage, similar to a brand name or differentiated product for consumer goods companies. This is difficult to create in property as one office block or factory is very much like another and one tends to be a captive of the market. In-house research has indicated that large dominant shopping centres have a competitive advantage in that their rentals are linked to the prospects of a portfolio of businesses and these businesses have a goodwill value attached to their specific locations that is reflected in higher rental levels.
Fountainhead buys for the long-term
As direct property is illiquid the firm views this as the correct low risk approach. Opportunities are identified which have such favourable economics or are so favourably priced that should there be the need to hold them for the medium-term, the downside risk is low.