As investors who are willing to maintain perspective by taking a patient and disciplined approach, we believe we will be rewarded over the long term. If our investment thesis holds true, we persist. Many of our core investments have been held for three or more years, where management execution has been consistent and the value proposition is still apparent.

We believe in backing people who are proven and aligned with their shareholders. One of the most fundamental factors consistent across the majority of company success stories in our investment universe is a high-quality, proven management team with “skin in the game”. NAOS Directors and employees are significant holders of shares on issue across our strategies, so the interests of our shareholders are well aligned with our own.

This means we are not forced holders of stocks with large index weightings that we are not convinced are attractive investment propositions. We actively manage each investment to ensure the best outcome for our shareholders, and only invest in companies we believe will provide excellent, sustainable, long-term returns.

As a specialist fund manager since 2004, over the years NAOS has developed a strong “circle of competence” (or mental models) in specific industries. We openly acknowledge we avoid businesses that are either too complex to understand, or heavily influenced by one or two variables, such as interest rates or commodity prices. Instead, we concentrate on businesses that fall within our circle of competence, aiming to minimise the risk of permanent capital loss. Unlike others, we are comfortable setting aside investments that we consider “too hard”, while we compound our knowledge in specific industries where we believe we have a competitive edge.

We believe in taking advantage of inefficient markets. The perceived risk associated with low liquidity (or difficulty buying or selling large positions) combined with investor short-termism, presents an opportunity to act based purely on the long-term value proposition, where the majority may lose patience and move on. Illiquidity is often caused by aligned founders or management having significant holdings in a company. The NAOS LICs benefit from a closed-end structure, which means they do not suffer “redemption risk” and we can focus on finding quality, undervalued businesses regardless of their liquidity profile.

As an investment manager, NAOS recognises and accepts its duty to act responsibly and in the best interests of shareholders. We believe a high standard of business conduct and a responsible approach to environmental, social, and governance (ESG) factors is associated with a sustainable business model over the longer term. This benefits not only shareholders, but also the broader economy. NAOS is a signatory to the United Nations-supported Principles for Responsible Investment (UNPRI) and is guided by these principles in incorporating ESG into its investment practices. NAOS is also B Corp certified.