The Rules of Investing

How Ophir spot offshore growers (before they get big)

Guest: Andrew Mitchell, Ophir Asset Management.
In recent years, there's been an increasing trend of successful Australian businesses expanding offshore. In prior decades, offshore expansion attempts had rarely gone well. But now, Australian businesses ranging from fintech to retailers have seen their fortunes grow overseas.
Andrew Mitchell, Director and Portfolio Manager at Ophir Asset Management, says one key reason has been the falling costs building a brand overseas. While once, a huge team of marketing and salespeople would’ve been required to launch a brand offshore. But today, this can be done with a small team using Google or Facebook ads.
In this podcast, Andrew tells us how identify these offshore growers, why A2 Milk could double, or even triple its market share, and he gives us an update on his #1 stock for 2020.
 

A key question most investors ignore, do you?

Guest: Troy Angus, Paradice Asset Management.
Investors ask themselves many different questions when considering an investment thesis; how fast can the company grow? How expensive is it? How good are the management? But one question they general fail to consider is, 'am I wrong?' Troy Angus, Head of the Australian Equities Fund at Paradice Asset Management, says it’s important for investors to always consider the counter factual.
“When a stock goes up, and you don’t own it, prima-facie, you’re wrong. You should be constantly reassessing the investment case and wondering, ‘what did I get wrong here?”
This is a question they were forced to ask themselves again recently, as expensive technology stocks on the ASX have continued to rally.
Hear the rest of the story in this week’s episode of The Rules of Investing podcast. He also shares one thematic that’s a major beneficiary of recent policies, and his preferred exposure to that theme.

Chris Stott launched a new boutique. Then COVID hit.

Even at the best of times, building a new portfolio from nothing is a challenging task. But for Chris Stott, Chief Investment Officer at 1851 Capital, the challenge was truly unique. After a 12-month break from the industry, he raised $80 million for his new firm (including a chunk of his own money) in late 2019. February 1st looked like a good time to start investing, given his track record of outperforming during reporting season. For the first three weeks, everything was business as usual. But in the final week of February, fear took over as reality sunk in for markets.
In this week’s episode of The Rules of Investing podcast, Stott tells us how he reacted to the changed market conditions, whether he thinks the worst has passed for markets, and he shares one Aussie small cap that's riding tailwinds from the COVID shutdowns.

Don’t fight the Fed, buy commodities instead

Guest: Ben Cleary Portfolio Manager, Tribeca Global Natural Resources Fund.
Soon after COVID-19 lockdowns were announced, central banks injected trillions of dollars of money supply into economies. This, combined with huge rescue packages from governments, lit a fire under financial assets, quickly sending them back towards (and even beyond) previous highs. One sector set to benefit from this money printing is precious metals, according to Ben.
“The last real bull move for gold was following the GFC in the US, where there was around $3 trillion globally in stimulus. We’ve already had almost five times that amount in the last three months.”
In this episode of The Rules of Investing Podcast, we also discuss a better alternative than lithium for getting exposure to the battery boom, and one little-known sector that could deliver big returns in the coming years.

The $200 billion opportunity to power Australia's future

In Australia, just 20 coal fired power stations remain operational today. That number is set to fall dramatically over the coming decade; by 2030, 55% of Australia’s coal-fired power stations will be over 30 years old, and many of them will be either retired or scheduled for retirement. This creates a massive opportunity for investors, who can benefit from the stability, income, and capital growth that comes with investing in renewable energy. 
Sam Reynolds, Managing Director of Octopus Investments, is well familiar with this opportunity, having managed the largest investment team in Europe dedicated to renewable energy. He returned to Australia in 2018, seeing the massive opportunity here. With such a large portion of our power generation requiring replacement, someone needed to fund the investments. 
"You're removing 85% of the supply in the market. To replace that 85%, you're looking at about $170 billion to $200 billion of new energy investments required in Australia."
In this episode of The Rules of Investing podcast, Sam busts the myths that renewables are expensive and unreliable, and he explains why coal-fired power stations must be replaced regardless of climate change concerns. 

The unspoken rules of Wall Street’s best hedge funds

Working as an analyst on Wall Street, Qiao Ma, Portfolio Manager at Cooper Investors, had the privilege of meeting legendary hedge fund manager, Julian Robertson. Qiao worked at Coatue Management, one of the famous “Tiger Cubs” that spun off from Tiger Funds Management. It was an incredible experience to be grilled by Julian about a stock, but she warns that it was important you’d done your homework.
“Julian had an unspoken rule, if you cover a stock, or you pitch a stock, you better know more about that stock than anyone else in the world.”
Today, she applies that same principle with her own analysts.
In this episode of The Rules of Investing podcast, we discuss her experience in China at the start of the COVID-19 outbreak, how one of her first investments saw 15% of its value evaporate overnight, and some of the exciting opportunities she's seeing throughout Asia today.

Buy growth, but don't ignore the price

Michael Frazis, Founder and Portfolio Manager at Frazis Capital Partners, is positive about the outlook for equities. Despite the obvious challenges the world faces, a combination of monetary and fiscal stimulus, and economies that are beginning open back up, should present a perfect setup for growth equities. But that doesn’t mean investors can be blasé about what they buy. He warns that in some popular sectors, the prices have gotten too high in some names.
“Even in the hottest parts of the market, where there’s companies trading on 25-35 times sales or more, there are companies trading on a tenth of that. I think it’s extraordinarily important now to dodge some of those companies.”
In this episode, we discuss why he's so bullish right now, some new additions to his portfolio over the last two months, and why he was buying Afterpay as the stock fell in March.

The biggest experiment in markets: How does it end?

Guest: Sean Fenton, Sage Capital
In response to the COVID-19 shutdowns, governments and central banks around the world have embarked on an enormous monetary and fiscal experiment, the scale of which has not been seen before. In the space of a few weeks, the US Federal Reserve added more to its balance sheet than the entire period between 2009 and 2014. Meanwhile, additional spending measures combined with falling tax receipts are expected to see the US deficit soar to US$3.8T in 2020, almost 20% of GDP.
But in the face of this massive stimulus, demand has fallen off a cliff, the economy has stopped, and unemployment has spiked to 1930's levels.
Sean Fenton from Sage Capital says we're seeing a massive tug of war between liquidity and economic fundamentals, and it's not clear yet which side will win.
"This is an experiment that has no defined end point for how it turns out, just a range of possibilities. Those possibilities are very wide, and can have some divergent outcomes."
But what are the implications of all this for markets? And how are investors supposed to position for such an environment? We discuss this in the latest episode of The Rules of Investing podcast. He also tells us about his highest conviction investment right now, and shares his view on whether we'll see a new high, or a new low first.