1. Adams Espouses a “Market First” Analysis of Opportunity by Looking for Discontinuities. Provide a Critical Analysis of This Strategy and How It Is Operationalised by Adams from the Perspective of Potential Lps.

778 Words Mar 15th, 2012 4 Pages
Adams discontinuity based investment strategy revolved around making investing in companies which were in in the process of or on the fore of exploiting dramatic and sudden changes in well developed markets. Adams focused on both discontinuities and a targeted investment strategy in his search for above average returns.
Adams operationalized his discontinuity based investing method by hiring only engineers as partners, leveraging their technical training in the search of promising markets in which to invest. Overtime ACM’s investment focus evolved to focus on markets which he and his partners were already relatively familiar with and had already recognized as attractive.
From a Limited Partner’s perspective Adams strategy in comparable
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Not only were investors being exposed to diversification in the form of different investment methodologies, an LP also received exposure to the inherently high growth technology sector, all of which was a fantastic way to gain access to shifts that would create opportunities for start-up companies to become market leaders leading to high returns for investors.
The four primary causes of discontinuities
1. Standards –
2. Regulation –
3. Technology –
4. Distribution –
Adams believed “Market due diligence is the only due diligence you can do independent of a transaction.”
A unique part of the ACM strategy was the need for unanimous firm agreement upon the industry or market before individual companies were considered for investment. This was based on the premise of top down analysis, meaning that only when market or industry based analysis showed potential for a discontinuity based investment would further research be conducted to find viable target companies. In addition, the inclusion of a Discontinuity Roundtable, consisting of twenty industry experts and observers that periodically met with the ACM partners to identify and discuss market discontinuities, provides a comprehensive and systematic approach to identifying investment opportunities in the market, and makes ACM more attractive as an investment partner.