Responsible investing incorporates environmental, social, and governance (ESG) factors to evaluate long-term financial performance and create sustainable value for investors and society.
At Arco Assets Management Investments, our Governance and Responsible Investment (GRI) team is dedicated to systematically addressing ESG factors. We focus on understanding investment challenges tied to systemic issues like climate change, inequality, poverty, and resource scarcity, while promoting a broader sustainability mindset across our business.
We view risk as the possibility of permanent capital loss. We look for competitively entrenched, well-managed, publicly traded businesses selling at discounted prices to help drive our goal of generating superior long-term absolute returns and minimizing the risk of permanent capital loss.
Managing against capital loss is deeply embedded in our investment approach, beginning with our bottom-up investment criteria.
Portfolio construction is 100% bottom-up and benchmark agnostic, with strict portfolio guidelines.
We actively monitor our portfolios to manage risk at both the individual stock and portfolio level.
We acquire stocks at a significant discount to their appraised value, ensuring a wide margin of safety to minimize the risk of permanent capital loss and maximize potential returns, as demonstrated in the example below.
Margin of Safety Example: Purchase business at $24/share with an appraisal value of $40/share (60% P/V)
This illustration does not reflect performance of any particular security. Actual investment performance and returns are not guaranteed. “Margin of Safety” is a reference to the difference between a stock’s market price and Southeastern’s calculated appraisal value. It is not a guarantee of investment performance or returns. The P/V ratio represents a single data point and should not be construed as something more. P/V does not guarantee future results, and we caution investors not to give this calculation undue weight.
We embed ESG best practices and analytics in our investment processes, enhancing our traditional financial analysis – to open new investment opportunities, help manage risk and seek to enhance returns over the long term.
Including or excluding certain investments to meet specific criteria to suit clients' beliefs, such as religious or ethical values.
Positioning towards issuers with leading ESG practices or actively engaging with underperformers by these standards.
Targeting issuers that address social/environmental challenges via their products and services.
Investing with the explicit intention to generate positive and measurable social and environmental outcomes.
Arco Resources has been a signatory of the Principles for Responsible Investment (PRI) since April 2013, ranking ahead of the peer median score in all categories in 2020.
Our 40+ Arco Communities — sometimes called associate resource groups — empower our people to help lift the voices of everyone at Arco Assets Management. Arco Communities are driven by our associates who unite around common experiences and passions, becoming allies for inclusion and equity. Arco Communities represent a rich diversity of identities and interests, including race/ethnicity, gender identity, sexual orientation, faith, mental health and much more. The list is always growing, as our employees raise their hands to create new Communities for our people to connect.
