Meet The Manager – Q/A with Microequities Asset Management CIO, Carlos Gil

Who is Microequities?
Microequities is a boutique fund manager located in Sydney, Australia. It was founded in 2005. The mission of our company is to deliver investors superior long term returns by investing in companies that are both undervalued and growing.

We pride ourselves on being heavily co-invested in all our funds which ensures that our clients, who are our family, can trust that we are making investment decisions with all our best interests in mind.

Our team has been investing together for over 10 years and was one of the first investment firms to focus on small and microcap businesses. This means that our investors can rely on a wealth of expertise, experience and investment processes that we have built over that time. We have been investing through the ups, and the inevitable downs, of market cycles and believe that investing in the undervalued, profitable businesses this asset class contains will generate long-term wealth.

What is Microequities investment philosophy?

At the core of our DNA, we are long term value investors who seek to uncover great businesses that are truly undervalued.

Our investment philosophy seeks to identify businesses that have a likely and probable long-term growth pathway; i.e. the business revenue, its earnings and its free cash flow will augment over time because that’s what really drives the intrinsic valuation.

We will only deploy capital to a business, if the market value is significant lower than what we consider the intrinsic value to be of that business.

Why should investors invest with Microequities?

We didn’t initially set out to invest for other people. My focus was to do what came naturally and through the true love of the investment process, people eventually asked to join me on that journey.

What motivates us each and every day, is the search for a good quality business that we can see will grow, has good management and is able to be bought at a discount.

In order to find a company with these rare qualities, you need to turn over a lot of rocks and read large volumes of reports; and for us that process is exciting.

Why does Microequities invest in microcap and small cap businesses?

We invest in microcap and small cap businesses because these companies tend to grow faster than mid-cap and large cap businesses over the long term. Another important fact about the microcap and small cap businesses is that the growth they generate is company specific. i.e. It’s not based on the prevailing macro economics cycle. You can acquire businesses that might have a product that is in the early stages of its life cycle or the business may be gaining market share from its competitors, or expanding geographically both nationally or internationally. Under any of those scenarios the growth and economic trajectory of that business is dependent on company specific factors not the prevailing macro-economic climate.

We look at parking long term capital into certain microcap and small cap businesses that fit out investment doctrine because we believe that the business is worth more than the current market share price. Since the business is growing, we think 5 years from now its intrinsic value will be far higher than what it is today.

What is Microequities view of the current market?

Whilst we don’t have market views and remain invested through all types of market cycles, we are excited by the bifurcation/disconnect of pricing currently being observed in the market. In our opinion, there is a significant part of the market that is highly overpriced, but within our asset class there currently exists a subset of investment opportunities that are highly undervalued, GFC like valuations. We focus on owning these opportunities across all our funds.

How can advisers learn more about Microequities?

Advisers can visit our website and learn more about the four wholesale and one retail fund that we offer to investors.

They can also call our relationship managers on 02 9009 2900 and we will be happy to answer all their questions in regard to our investment funds.

Finally, we also run educational webinars for our clients and the advisers can visit the url below to watch the webinar on the topic “Deep Value Fund, full of undervalued opportunities."

Deep Value Fund, full of undervalued opportunities
Level 3, 478 George Street, Sydney, NSW 2000

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