Safety Investment Strategy
Minimizing Your Risk
If you want to keep your risk as low as possible, then you should follow our Safety strategy. You can expect your liquid and securely financed shares to lead to better returns, particularly in turbulent or volatile times. During a market downturn or recession, the Safety strategy often works best.
The Safety strategy is based on key financial metrics that verify the financial strength of a company, such as debt levels, liquidity, and refinancing. The objective is to identify companies with a relatively high payment capacity or cash reserves. These will have the highest safety ranking compared to their competitors.
Metrics of the safety strategy
Leverage
Defined as:
We use net debt and equity at the end of the period.
Liquidity
Defined as:
We calculate net debt at the end of the period. The cash flow from operating activities is an average over a perceeding time period.
Refinancing
Defined as:
We calculate net working capital (NWC) and equity at the end of the period.
NWC = Net working capital
AC = Average cash flow from operating activities