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When hunting for new ideas, Marcus Burns, Portfolio Manager at Spheria Asset Management, takes three different approaches. 1) Screening for cashflow, quality, and balance sheet strength. 2) Lateral ideas, where an idea generated in large caps, for example, can be applied to a microcap investment. 3) A contrarian screen. “Whichever stocks have the most negative recommendations; we might consider looking at those.” Earlier this year, Monadelphous was screening well for cashflow, earnings, and balance sheet strength, in addition to being widely disliked among the sell-side community. “We thought it had been well and truly oversold – the mining cycle had been more than priced in.” The share price has since rallied nearly 50%. In the full video below, he also examines one stock trading below its cash backing.


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