Mubadala Capital’s Public Equities business was established in 2011 and manages a long-biased, concentrated portfolio of global public equities. In addition, the Public Equities team also manages certain positions on behalf of Mubadala.
Mubadala Capital’s Public Equities team employs a consistent, disciplined and private equity-like approach to investing in public markets with a focus on traditional value investing and special situations. The team seeks to invest in value-oriented companies and special situations that the team believes are either currently misunderstood or undergoing structural change.
The key attributes of the investments in the long-biased concentrated portfolio include:
- Quality businesses typically earning high unlevered returns on invested capital with significant barriers to entry and predictable and reliable cash flow generators.
- Easy to understand businesses operating in a well-known industry and analyzable from the outside.
- Businesses that have compelling valuations with highly skewed risk / reward profiles and high margins of safety with price-to-value discounts of 50 percent or more.
- Target businesses are typically mispriced for a range of reasons: businesses / industries in transition, temporary financial underperformance, too small and not covered by Wall Street analysts, not currently on investors’ radar screens, businesses facing capital structure challenges and situational complexity, among others.
Typical Investment Parameters
Sector agnostic with a historical focus on companies with predictable earnings potential within the consumer products and services, finance, industrial, media / telecom, and real estate sectors in which the team has investing experience.
North America and Europe; may consider other geographies on a selective basis, particularly where Mubadala’s relationships can be leveraged.
Generally, aims to invest in three-to-five core long investments each year; ability to go short.
Carefully designed universe of small and mid-cap companies with a bias towards U.S. $1 billion to U.S. $20 billion market capitalization, and flexibility to look outside of this range.
Target Portfolio Construction
Concentrated investments in the highest conviction ideas:
- Long portfolio: 15 to 20 investments.
- Short portfolio: 10 to 15 investments.
Net exposure will typically range between 40 and 80 percent in normal market conditions.
Achieve strong, long-term returns with a focus on capital preservation.