We look for excess investment returns for our investors by capitalizing on opportunities that arise because of disequilibria from cyclical or structural changes in the price of risk, assessment of cash flows or regulation. These market opportunities may result from actual or expected changes in market factors such as systemic risk, volatility, interest rates and inflation or they may be the result of externalities such as disintermediation, taxes, regulation and government intervention.
We search for alpha by finding opportunities that are overlooked or mispriced by the market. This includes scrutinizing jurisdictions and sub-sectors within broader sectors that have been overly-penalized, looking for individual project cash flows we feel are mispriced and taking advantage of illiquidity premiums.
How we find excess returns for our investors
We seek alpha or excess returns by finding opportunities we feel are overlooked or mispriced by the market. This includes looking at jurisdictions or sub-sectors within broader sectors that have been overly-penalized, looking at individual project cash flows we feel are mispriced and taking advantage of illiquidity premiums. In traditional infrastructure, this may include demand-based projects where revenue growth is undervalued, construction that is mispriced or through more technical means such as refinancings we feel will happen faster than the market expects. In corporate-like infrastructure, we look for mispriced business risk or where the rating agencies have overly-penalized a credit.
Strong sector and sub-sector experience
The opportunities we seek are where we have strong experience and a competitive advantage. Sectors and sub-sectors where the Directors have specific experience prior to Sequoia include transportation, energy, utilities, power, renewables, pipelines, telecommunications, toll roads, rolling stock, ports, shipping, airports and aircraft. This experience spans multiple jurisdictions including the US, UK, Europe, Australia and Canada. Our practical, hands-on sector experience helps us deliver maximum performance in managing portfolios, sourcing and analysing assets, and structuring and – if needed – working out transactions.
Solid track record based on experience and judgment
Sequoia seeks to deliver competitive investment returns through investment decisions based on a solid track record of managing investments and credit risk through many economic and market cycles. Although we use proprietary models in our research and analysis, final investment decisions and advice are always the result of judgment gained through years of experience.