Patience and discipline in a value investor’s 40-year playbook

For four decades, veteran investor Alex Roepers has steered Atlantic Investments, steering the firm's higher conviction investment strategy towards undervalued mid-cap companies across the US, Europe, and Japan. Roepers maintains that the core investment fundamentals remain constant, despite market fluctuations over the years. Focusing on mid-cap industrial products and services companies, the firm sidesteps areas with complex analysis or idiosyncratic risks that don't align with concentrated investing.

In the current market, Roepers emphasizes the importance of a level head and skepticism towards the AI frenzy. He cites the overrated excitement from the turn of 1999 to 2000, when fears about computers failing due to date rollover led to no actual consequences. To avoid direct exposure, Atlantic Investments seeks opportunities in the AI trade's "picks and shovels," such as Kirby, the largest owner of inland barges transporting goods across the US.

This company benefits from high inventory levels and is fully leased, positioning it well for upside potential due to the data center buildout.

Atlantic Investments also targets spin-off structures, focusing on companies that interact positively with management and shareholders. These businesses often result from acquisitions and are grown through further deals until they become unwieldy, typically trading at conglomerate discounts. Roepers highlights that Japan has been a fruitful region for the firm, with over 200 companies in its investable universe and market caps ranging from $2bn to $20bn.

Japan's government initiatives and pressure to improve returns on equity, as well as increased involvement from private equity, have created a conducive environment for activist investing.