Risk Management

Terra Capital is focused on risk management and seeks to mitigate market risk through asset diversification and risk limits set according to prevailing market conditions. We invest within stringent risk limits which ensure our portfolio is diversified and is as liquid as the sector permits.

Fundamental to our investment process is our risk mitigation methodology which is as follows:

  1. Buying far cheaper than intrinsic value

Buying solid businesses at a large discount gives a buffer against fundamental risks. Our investment tenure in the space has led to the development of an extensive network of corporate advisor, broker and promoter contacts which facilitates high quality deal flow. Our conservative valuation principles guide the execution of our strategy.

  1. Low debt, simple capital structures

Our investments have little or no debt and we avoid complex capital structures.

  1. Rigorous due diligence

We do everything we can to gain a deep understanding of company assets, management’s plans and capital adequacy. This involves frequent site visitation and forming a strong relationship with management

Through our continual review of winning and losing positions and broader investment themes, the over-riding focus of management is that the returns being generated are sufficient relative to the risks being taken.

At Terra Capital we consider our relatively small AUM as an asset, not a liability. Given our size we’re able to reduce and tailor positions swiftly to adjust exposure to various commodities or market conditions at opportune times. Terra Capital does not use leverage and attempts to hold significant amounts of cash during periods of market stress.