Investment Philosophy

Why Is Value Investment Such A Unique Concept In The Turkish Equity Market?
  • Fly-­in foreigners with lots of other interests or short­-term locals trying market­ timing based on political developments and central bank pronouncements do not have the concentration to sort out long-term value-based investment opportunities.
  • Large capitalization stocks are overly preferred investments due to liquidity requirements and short-term trading needs leading to substantial value investment opportunity pool of mid – small-cap stocks in the market which often trade at 2 – 3X adj. EV/Ebitda and 3 – 6X adj. P/E level.
  • TALAS has a focus on sustainable high organic growth EM sectors such as consumer durables, renewable energy, petroleum products, automotive, banking.The lack of focus on value creates an opportunity to profit from gaps between price and intrinsic value of individual firms.
Target Universe within the Broad Turkish Equity Market Universe
  • Strong Balance Sheet: Interest expense adjusted less than 25% of EBITDA
  • Sustainable Profitability: EBIT positive through economic cycles
  • Consistent and Predictable Cash Flows: Consumable and maintenance/repair/overhaul revenues, diverse customer base, wide range of products/services and geographic diversification

Demonstrated and Firm Competitive Advantage: High barriers to entry, hard-to-replace assets, leading market positions and strong brands.

Operational Philosophy

Talas Turkey Value Fund, LP focuses on minimizing asset turnover, frictional costs (e.g. fees, taxes, etc.), and expenses. Over the long term, this commitment will enhance returns and provide significant value to our LPs.

We provide quarterly letters that present salient quantitative information and annual letters with commentary (such as this) that provides relevant details regarding the fund. An annual audit report, K-1 or relevant tax documentation, and quarterly statements are provided by our third-party service providers.

Alignment of Interests

Alignment of the general partner and limited partner interests is a top consideration in every operational decision. The unique structure of Talas Turkey Value Fund incorporates ZERO management fee, a high-water mark provision, and an emphasis on performance-based compensation to achieve alignment objectives. A shared pursuit helps avoid conflicts of interest and allows us to maintain the integrity of the fund over the long run.
Compensation is earned only after reaching new all-time highs (high water mark) and on annual returns above 5%. The economics are simple: we only make money when you make money.