What is Liquid Private Equity?
Simply put, it’s a private equity approach to investing in liquid stocks.
Anchor Capital manages concentrated investments in one of the world’s most inefficient, yet liquid market niches – U.S. publicly-traded companies with market capitalizations generally between $100 million and $500 million.
This sector of the market is ripe with opportunities for selective investing. As opposed to their larger-cap brethren, smaller market cap companies are generally under-followed, more volatile and often misunderstood by market participants. As a result, significant gaps often develop between these companies’ stock prices and their intrinsic values. We believe that by “cherry picking” great companies at undervalued prices based upon careful selection then applying an active management style, we can continually produce exceptional results through concentrated investing.
Anchor Capital is uniquely positioned to identify, investigate and selectively invest in these opportunities.
Objectives in Investment Selection
When identifying potential candidates for Anchor Capital’s portfolio, we look for companies that provide both a wide margin of safety and significant upside potential. Our typical investment candidate exhibits many if not all of the following factors:
Attractive and understandable industries
Healthy financial profile based on a number of criteria
Accessible and rational management
Proper governance and alignment of incentives
Niche leadership positions
Clear and sustainable value propositions
Secular advantages and identifiable catalysts
Significant discount to intrinsic value and peers
We continually cultivate a steady pipeline of attractive investment opportunities regardless of market conditions, and only invest in companies that we would want to own privately. Anchor Capital views its investments as owning part of a company as opposed to simply investing in a stock. As such, we conduct our own research, and constructively engage with senior leadership of our portfolio companies with a view toward long-term value creation and unlocking that value for shareholders. Our expected investment holding periods are one-to-three years, sometimes longer, resulting in very low investment turnover.
Our Fund Offerings
Anchor Capital offers investment opportunities in its Master Fund as well as sidecar funds.
The Master Fund is our primary investment vehicle. It is a limited partnership through which the firm makes concentrated investments in liquid publicly-traded securities. We do not use leverage or derivatives to achieve our investment goals. As such, the Master Fund’s balance sheet is at all times comprised simply of cash and concentrated stock positions on one side, and 100% equity on the other side. The firm provides transparent monthly reporting and liquidity for investors in the Master Fund. Our investor base is comprised of individuals, family offices, institutions, corporations and endowments. Investment in the Master Fund is restricted to accredited investors.
Anchor Capital’s sidecar funds are single investment vehicles that are presented as unique market opportunities arise. Access to sidecar funds is generally restricted to investors in Anchor Capital’s Master Fund. Anchor Capital initiates sidecar funds when:
(a) persuasive situations emerge which do not fit the investment criteria for the Master Fund (such as illiquid preferred of private equity investments, participation in going-private transactions and so on); or
(b) the firm has a full allocation to an investment in its Master Fund and believes the investment merits incremental capital.