Turtle Creek Asset Management

Turtle Creek is a Toronto-based, independent equity investment manager focused on long term capital growth for a clientele of high-net worth families, institutions and wealth advisors.  The firm’s asset under management have grown to US$4 billion over the last 26 years, most of which is managed according to a single strategy that is now available in a UCITS fund.  Over the long term, Turtle Creek has consistently outperformed the market.  While doing so, the firm works at minimizing risk through a deep and thorough understanding of each of its investments, combined with a unique position management process that seeks to continuously optimize its portfolios – for both risk and return. Furthermore, Turtle Creek’s co-founding partners are aligned to a degree that few other firms can match: all of their investable wealth is alongside the firm’s clients.

Turtle Creek’s investment process starts by choosing what it believes are the right public companies to own for the long term – sound businesses with intelligent and ethical management teams and boards that understand the importance of capital allocation and are constantly searching for ways to earn superior returns for their shareholders over time.  The firm’s Investment Team then spends considerable time formulating and maintaining a view of each company’s Intrinsic Value, defined as the present value of forecast future cash flows.  The most important factor in determining whether or not to invest in a company, and furthermore, its weighting in a fund, is a company’s prospective long term expected return, which is a function of the difference between Turtle Creek’s estimate of Intrinsic Value and the current share price. The cheaper the company, as measured by comparing the share price to Turtle Creek’s estimate of Intrinsic Value, the less ‘risky’ the company should be and, commensurately, the higher the expected return, which argues for a larger positive weighting in a fund.

Turtle Creek tries to consider all material risks, including those relating to ESG factors when determining each company’s Intrinsic Value.  A significant ESG risk which reduces Intrinsic Value may result in a particular company having a lower weighting or removal from a fund entirely.  Similarly, a positive ESG benefit may result in an increased view of Intrinsic Value which may increase the weighting of a particular company in a fund.  A variety of ESG factors may be considered depending on the company. These factors can include health and safety, labour relations, work conditions (including child labour and forced labour), human rights, employee attraction and retention, customer satisfaction, product safety and liability, climate change, pollution and waste, water, sustainable production, clean energy, board structure, oversight, executive compensation, minority shareholder rights protection, capital management, dividend payouts, corporate strategy, supply chain oversight and management, technological innovation, cyber security and privacy.