Plaisance Capital is committed to a Contrarian Value investment philosophy. Our team – above all else – focuses its resources on determining the long-term intrinsic value of a business and comparing that estimation with the price offered in the public equity markets. We maintain a long-term time horizon, and we believe our willingness to hold contrarian positions without short term market validation, constitutes a competitive advantage.
We believe that momentum reinforcing market forces, namely pro-cyclical algorithmic trading and classic greed and fear driven actions, cause mispricings of individual securities. We find these mispricings across market cycles, although we see them as particularly pronounced at the end of long cycles.
Plaisance Capital employs a Long/Short portfolio model to exploit equity mispricings. We typically buy shares in undervalued out-of-favor dormant equities undergoing a specific change factor catalyst and sell short over-valued equities with higher embedded expectations than competitive forces will permit. We often add to our positions, whether long or short, if the market moves against us so long as we believe our original thesis still holds, as this ‘contrarian’ action enhances our long-term return.
We estimate intrinsic value based on a classic discounted cash flow model. We find that understanding embedded market expectations, as well as our own estimates of value under different fundamental scenarios, drives our investment success. Our team performs in-depth fundamental research and due diligence on key investment valuation sensitivities. This fundamental research input is the key to our ability to estimate the intrinsic value of our long investments and short sales opportunities.