Foto cedidaOlga Kosters, directora de Private Debt Secondaries. Tikehau Capital ficha a Olga Kosters como nueva directora de Private Debt Secondaries
Tikehau Capital, an alternative asset management and investment group, appointed Olga Kosters as Head of Private Debt Secondaries.
Kosters’ role will be to launch the firm’s private debt secondaries business. She will be based in New York and report locally to Tim Grell, Head of Tikehau Capital North America, and to Cécile Mayer-Lévi, Head of Private Debt activity.
Olga Kosters (47) has twenty years of investment and structuring experience in private and public capital markets. Prior to joining Tikehau Capital Kosters advised large institutional investors on the US private credit strategies while at StepStone Global, and led the execution of corporate private debt strategy at Zurich Insurance Group. Prior to this Kosters has held several positions at the European Bank for Reconstruction and Development (EBRD) in London.
“Over the last fifteen years Tikehau Capital has grown to become one of the most well-capitalised asset management firms globally and has developed a deep network of institutional investors and strategic partners. The firm keeps its focus on underwriting, and continues to invest a large portion of its own capital alongside its investors,” said Olga. “In a context of fast growth, the team has successfully maintained its entrepreneurial spirit and a strong set of core values. I am delighted to join the team to build the new private debt strategy.”
Cécile Mayer-Lévi, Head of Private Debt activity, commented: “We are delighted to welcome Olga to our team and expand our offer to the secondaries market in private debt. We see that this market is emerging and we believe it could develop significantly in the coming months.”
Kosters received an MBA in finance from Hofstra University, and is a CFA charterholder.
Clients and friends of BNY Mellon met on November 1 at South Florida’s premier golf resort, Trump National Doral, to listen to Carlos Rodriguez, senior CPM of Newton IM, talk about the BNY Global Real Return and the BNY Global Equity Income Funds. Afterwards, they enjoyed a Scramble golf tournament on the iconic Red Tiger golf course. Networking conversation followed at the Champion’s Bar and Grill.
During his presentation, which followed a speech by David Ayastuy, Managing Partner of Unicorn-the firm that distributes BNY Mellon strategies in US Offshore and Latam, Rodríguez went over the capabilities and differentiators of each of the strategies, mentioning that, “considering that we are living the longest bull market in history, it makes sense to have strategies that can handle the possible end of this cycle… A strategy that not only takes advantage of the upside but protects your investment in difficult times.”
In his opinion, “there are many signs that show that we are near the end of the cycle, it does not mean that it is going to happen this month but we are close, and we prefer to miss the last two innings of the bull market that participate in the first of the bear.”
The specialist placed special emphasis on the fact that, despite the US’ positive outlook, one must look outside to anticipate the global situation, “since in the last almost 10 years, the United States has only contributed to 17 % of global growth, so it is very good that things are fine there, but we care more about what is happening in China, and that is not very positive right now.”
After the presentation, the attendees enjoyed a lunch and got ready to play a round of golf. The winners of the tournament were:
Norberto Quirno Costa – UBS
Ezequiel Sporleder – UBS
Agustín de Estrada – Aurora Partners (Bolton)
Carlos Rodríguez – BNY Mellon – Newton IM
Agustin de Estrada also won the longest drive and Carlos Marranzini of Merrill Lynch took home closest to pin.
Pictet Asset Management plans to open an office in New York by mid-2020, according to Mutual Fund Wire, which cited Laurent Ramsey, CIO of the European firm, during an internal meeting. A Pictet spokesmen did not immediately respond to requests for comments from Funds Society.
In theory, Liz Dillon, Head of Sales for US Sub-Advisory and Intermediaries of Pictet, will leave her current residence in London to head the new office, where about 12 people would be employed.
The office will cover Pictet’s institutional, offshore and subadvisory businesses.
Pictet Asset Management is an independent asset manager, overseeing over USD 192 billion (CHF 191 billion/EUR 176 billion/GBP 156 billion as at 30th September 2019) for their clients across a range of equity, fixed income, alternative and multi asset products. They provide specialist investment services through segregated accounts and investment funds to some of the world’s largest pension funds, financial institutions, sovereign wealth funds, intermediaries and their clients.
Foto cedidaPhoto: The $4 billion mixed-use Miami Worldcenter is underway on almost 30 acres in the heart of Downtown Miami.. Foto: Participant Capital
Participant Capital Advisors, LLC, a Miami-based real estate investment firm, with over US$3B in projects under development, has announced today that it has been approved to operate as a Registered Investment Adviser (RIA) in the State of Florida.
Established in 2018 as an affiliate of Royal Palm Companies, a developer with an extensive track record of more than 40 years, Participant Capital empowers investors with direct access to premium real estate projects and allows them to invest side by side with the developer, from the ground-up.
“Credibility of our experienced and knowledgeable investors is the preeminent asset for our company,” said Claudio Izquierdo, Chief Operating Officer of Participant Capital. “As we grow together and leverage our global distribution efforts, we want to make sure we provide a successful investment experience to those who are placing capital in uniquely positioned real estate projects.”
Participant Capital is currently partnered with over 40 distributors operating throughout Latin America and Europe and will be expanding to Asia and the Middle East over the next year. Its investment portfolio continues to grow with new world-class developments in South Florida and beyond.
Pixabay CC0 Public Domain. Scharf Investments lanza el primer fondo UCITS junto a iM Global Partner
iM Global Partner, a leading investment and development platform focused on acquiring strategic investments, and Scharf Investments, an investment firm providing high quality value investment strategies, have announced the launch of iM Scharf US Quality Value fund, the first collaborative UCITS fund between the two firms. The equity fund will seek to deliver compelling risk-adjusted absolute returns through a value-focused, fundamental, bottom-up approach.
The fund, which launched on September 12, 2019, will give investors outside of the US access to Scharf Investments’ expertise for the first time, facilitated by the unique business model of iM Global Partner who acquired a 40% interest in the California-based US equity value asset manager a few months ago.
iM Scharf US Quality Value Fund will be managed by Scharf’s experienced investment team, with a similar investment strategy to its core equity flagship product which has a proven track record spanning approximately 30 years. The investment team looks for securities trading at significant discounts to estimated fair value as a margin of safety and high earnings predictability. The fund is not publicly offered to all investors in all jurisdictions.
Brian Krawez, President of Scharf Investments, said: “We are delighted with the launch of our first UCITS fund with iM Global Partner. It is a great opportunity for Scharf Investments to reach new markets and new investors. We look forward to working with iM Global Partner as we continue to develop and refine our worldwide presence.”
Jose Castellano, Deputy CEO and Head of International Distribution at iM Global Partner, added: “Scharf Investments is a proven leader in value-oriented equity asset management and has an exceptional track-record. Their core equity flagship strategy outperformed the Russell 1000 Value and the S&P500 by 3.5%, with lower volatility*. Their entry into the UCITS fund market will allow broader access to Scharf Investments products for institutional investors and we are thrilled to support their expansion internationally.”
Scharf Investments is a California-based investment firm founded in 1983. Managed by Brian Krawez, President and Investment Committee Chairman, the company has grown from 5 people and under $700m of assets under management in 2007 to 22 people and $3.3bn of assets under management today.
Scharf Investments currently manages four distinct strategies:
A long-only US equity strategy, the firm’s core equity strategy on which the three other strategies are based
A long-only multi-asset strategy
A long/short hedged US equity strategy
A long-only global equity strategy
iM Global Partner, with its unique business model in Europe, has become a leading investment and development platform focused on acquiring strategic investments in best-in-class traditional and alternative investment firms in the U.S., Europe and Asia. Through the launch of this new UCITS fund, iM Global Partner continues its development as it pursues its dual objectives to both support its Partners with its management and distribution expertise and ensure investors have access to unique strategies that were not previously available.
iM Global Partner currently has strategic minority investments in five partners, including two outstanding complementary US large-cap equity managers with proven track records and a focus on downside protection.
Randall Caruso-Reynoso has joined Bolton Global Capital. Caruso was formerly with Morgan Stanley as a Senior Vice President since 2011 where he covered primarily Latin American clients. During his 17 years at Merrill Lynch International, he oversaw a book of ultra-high net worth clients, family offices, middle markets, and institutional clients in LatAm, MENA, and Western Europe. Caruso’s business plan is to transition his global book of clients to BNY Mellon Pershing as custodian on behalf of Bolton.
Prior to joining Merrill Lynch in 1994, his career focused on international commercial banking, corporate finance, and capital markets. Beginning in 1981, he worked at Citibank‘s operations in New York, London, Italy, and Spain. From 1989 to 1994 he worked at Bankers Trust in New York and Miami.
At Citibank he participated in various projects including a proprietary acquisition in Italy, the opening of the capital markets and currency exchange operations in Spain, the restructuring of a 75 branch bank in Italy purchased by Citibank, the establishment of the Southern European Fixed Income trading desk at Citicorp Investment Bank Ltd. in London. At the Bankers Trust International Private Bank, he covered markets in Mexico and was promoted to Manager of the Southern Cone Region. He was also the 1st Derivative Coordinator for Bankers Trust’s LATAM Private Bank.
In a phone interview, Caruso commented, “I have always been exposed to the management of capital, either for Central Banks at Citibank as a Cash Management Officer, for Pension Funds as an Advisor to their Investment Committees, or to Families as their Financial Planner. My team and I bring all these years of resources, experience and knowledge to our Global Client base by establishing our business here at Bolton.”
Caruso completed his degree in Economics at New York University, where he studied under the tutelage of Nobel Laureate Wassily Leontief. He has three children and now lives between Miami and his native New York City.
Pixabay CC0 Public Domain. Invertir en bonos globales en una época de tipos de interés negativos
What once would have been considered a strange anomaly may now be becoming the norm as yields on a growing proportion of the global bond markets turned negative throughout 2019. The escalating US-China trade conflict, fears of a global economic slowdown and the aggressive accommodative monetary policy response by central banks to those developments have accelerated this trend in the middle of 2019, according to Colchester Global Investors.
This environment has resulted in the market yield on approximately US$11 trillion of government debt falling below zero percent as at the end of August, 2019. This accounted for approximately 37% of the universe of outstanding government debt at that time. Some 40% of this amount was issued by the Government of Japan, and a further 14% and 12% by the French and German Governments respectively.
As a result of the extensive quantitative easing programs undertaken by central banks, collectively it is estimated that they now hold approximately 80% of all negative yielding debt. Whilst negative central bank policy rates and negative bond yields on sovereign debt had been observed for some time, this phenomenon has not been restricted to government bonds alone. In recent months yields on an increasing number of corporate bonds have also turned negative, new corporate debt has been issued at those levels and even negative rate mortgages have been offered in Denmark. While not as prevalent, such declines have resulted in the yield on approximately 7% (US$1 trillion) of the universe of global corporate investment grade debt also falling below zero percent.
Should investors hold negative-yielding bonds?
Given that negative yields imply an investor holding such a security to maturity will incur a loss (at least in nominal terms) does this imply that the ‘safe-haven’ characteristics of sovereign fixed income have been compromised? The evidence of the recent past would suggest not.
At Colchester they have observed that negative yields can become more negative in response to economic and political events and shifts in perceived risk levels. In other words, over the short term the returns to investors from ‘falling’ negative-yielding bonds may be positive as bond prices continue to appreciate. Indeed, many investors were surprised at the strength of the demand for safe-haven assets and the resulting size of the yield decline of already negatively yielding bonds during the most recent bout of risk aversion in the middle of 2019. For example, 10-year German Bund yields fell from -0.2% to -0.7% from mid-July to mid-August, returning +4.5% in USD hedged terms. Similarly, over the same period, 10-year Swedish bond yields fell from 0.1% to -0.4%, returning +3.0% in USD hedged terms.
This is not to argue that negative yielding bonds will always deliver positive returns, but simply highlights that the diversifying return characteristics of sovereign bonds still holds true in a negative interest rate world. Returns on a negative yielding bond may be positive or negative over the short term, just as they may be on a positive nominal yielding bond.
How is Colchester managing portfolios in the current environment?
Colchester continues to see the sovereign fixed income asset class as providing desirable diversification characteristics and specifically a negative correlation to risk assets. They believe that the events of mid 2019 suggest that despite the increasing prevalence of negative yields, this characteristic remains intact in the face of rising uncertainty and increased risk aversion. “The slowdown in global money and credit growth through 2017 and 2018 is likely to contain inflation in the near term and limit any large increase in bond yields. This benign environment is likely to be broadly supportive of bond prices and minimise the ‘cost’ of diversification insurance that may prove useful if the global economy, trade disputes or risk assets take a turn for the worse”.
Nonetheless at Colchester they are trying to limit their exposure to negative nominal yielding markets. “Instead we are skewing our portfolios towards markets that are offering positive real yields, that preferably also offer a positive nominal yield. Such markets are currently limited within the G10 or ‘traditional’ bond markets. It is tempting in such an environment to reach for yield by moving down the credit curve into subordinated or high yield debt, increasing exposure to emerging markets, or supplementing returns with an array of structured products. However, as all have a higher correlation with equity and other growth assets, this reduces the diversification benefit of holding bonds. Accordingly, we seek to build bond portfolios that not only offer higher relative real yields and attractive risk characteristics, but also maintain the diversifying integrity of a traditional bond market allocation. Therefore, while we are willing to add limited exposure to some non-traditional markets such as Singapore or Mexico, to benefit from their potentially higher real yields on offer and to offset some of the ‘insurance premium cost’, such exposure is limited to protect the diversification characteristics that most investors are looking for from their traditional sovereign bond allocations”.
Today their global bond portfolios are materially overweight versus benchmark those markets where they observe the most attractive prospective real yields. “Markets such as Norway, Singapore and Mexico, where both real and nominal yields are positive, feature in our portfolios. In contrast, the strategy is very underweight the euro area where both real and nominal yields are negative and our portfolios hold no exposure to German, French or Dutch bonds where yields are lowest. The strategy does however hold some exposure to negative nominal-yielding bonds, mostly in Japan. The Japanese market offers materially more attractive relative real yields than the core of Europe once we factor in the low level of projected inflation. Furthermore, the market exhibits very low levels of volatility. As we are looking to construct portfolios that in aggregate offer a balance between value (or expected return), liquidity and negative correlation to risk assets, it should be no surprise that despite their negative nominal yields, Japanese bonds have a role to play”.
MaxPixel CC0. Una economía fuerte, con un desempleo muy bajo y una Fed acomodaticia aceleran la actividad de fusiones y adquisiciones
While we are bottom-up stock pickers (and not stock market prognosticators or macro traders), we do note that despite the strong rally in the market so far this year, we continue to find many opportunities of stocks trading at significant discounts to our estimate of Private Market Value. Many of these are so-called “value” stocks including consumer staples, media and industrial companies.
The economy continues to be strong, with very low unemployment and now an accommodating Federal Reserve. This has led to ripe conditions for accelerating M&A activity, which, along with financial engineering, can cause undervalued stocks to close the valuation gap with over business values as Buffet and others typically describe.
Stocks have rallied into November first setting record highs as a solid October jobs report, improving China trade talks, easy central bank monetary policies, and the December UK election date agreement all fueled the advance.
After the FOMC statement release on October 30, Chairman Powell gave his assessment of the effect of recent rate reductions on the current state of the economy: “You are seeing strong durable goods sales. You are seeing housing now contributing to growth for the first time in a while. And you are seeing retail sales”…”More broadly, monetary policy is also supporting household spending and home buying by keeping the labor market strong, keeping workers incomes rising, and keeping consumer confidence at high levels.” Translation – rate pause. This all has benefits for the economy and value investing.
That said, it has seemed before that we are on the precipice of a trade deal with China, only to learn we are no closer and/or more tariffs are coming. So we wait and watch macroeconomic and political events closely, and seek a portfolio of companies that can withstand whatever economic conditions are before us. Furthermore, as we enter 2020 the market will surely be looking ahead to the November US Presidential election, with the market and specific sectors reacting accordingly which could help fuel further momentum for value stocks.
As always, we seek to buy high quality businesses trading at a discount to Private Market Value with Catalysts present to surface value.
Column by Gabelli Funds, written by Michael Gabelli
__________________________________
To access our proprietary value investment methodology, and dedicated merger arbitrage portfolio we offer the following UCITS Funds in each discipline:
GAMCO MERGER ARBITRAGE
GAMCO Merger Arbitrage UCITS Fund, launched in October 2011, is an open-end fund incorporated in Luxembourg and compliant with UCITS regulation. The team, dedicated strategy, and record dates back to 1985. The objective of the GAMCO Merger Arbitrage Fund is to achieve long-term capital growth by investing primarily in announced equity merger and acquisition transactions while maintaining a diversified portfolio. The Fund utilizes a highly specialized investment approach designed principally to profit from the successful completion of proposed mergers, takeovers, tender offers, leveraged buyouts and other types of corporate reorganizations. Analyzes and continuously monitors each pending transaction for potential risk, including: regulatory, terms, financing, and shareholder approval.
Merger investments are a highly liquid, non-market correlated, proven and consistent alternative to traditional fixed income and equity securities. Merger returns are dependent on deal spreads. Deal spreads are a function of time, deal risk premium, and interest rates. Returns are thus correlated to interest rate changes over the medium term and not the broader equity market. The prospect of rising rates would imply higher returns on mergers as spreads widen to compensate arbitrageurs. As bond markets decline (interest rates rise), merger returns should improve as capital allocation decisions adjust to the changes in the costs of capital.
Broad Market volatility can lead to widening of spreads in merger positions, coupled with our well-researched merger portfolios, offer the potential for enhanced IRRs through dynamic position sizing. Daily price volatility fluctuations coupled with less proprietary capital (the Volcker rule) in the U.S. have contributed to improving merger spreads and thus, overall returns. Thus our fund is well positioned as a cash substitute or fixed income alternative.
Our objectives are to compound and preserve wealth over time, while remaining non-correlated to the broad global markets. We created our first dedicated merger fund 32 years ago. Since then, our merger performance has grown client assets at an annualized rate of approximately 10.7% gross and 7.6% net since 1985. Today, we manage assets on behalf of institutional and high net worth clients globally in a variety of fund structures and mandates.
Class I USD – LU0687944552
Class I EUR – LU0687944396
Class A USD – LU0687943745
Class A EUR – LU0687943661
Class R USD – LU1453360825
Class R EUR – LU1453361476
GAMCO ALL CAP VALUE
The GAMCO All Cap Value UCITS Fund launched in May, 2015 utilizes Gabelli’s its proprietary PMV with a Catalyst™ investment methodology, which has been in place since 1977. The Fund seeks absolute returns through event driven value investing. Our methodology centers around fundamental, research-driven, value based investing with a focus on asset values, cash flows and identifiable catalysts to maximize returns independent of market direction. The fund draws on the experience of its global portfolio team and 35+ value research analysts.
GAMCO is an active, bottom-up, value investor, and seeks to achieve real capital appreciation (relative to inflation) over the long term regardless of market cycles. Our value-oriented stock selection process is based on the fundamental investment principles first articulated in 1934 by Graham and Dodd, the founders of modern security analysis, and further augmented by Mario Gabelli in 1977 with his introduction of the concepts of Private Market Value (PMV) with a Catalyst™ into equity analysis. PMV with a Catalyst™ is our unique research methodology that focuses on individual stock selection by identifying firms selling below intrinsic value with a reasonable probability of realizing their PMV’s which we define as the price a strategic or financial acquirer would be willing to pay for the entire enterprise. The fundamental valuation factors utilized to evaluate securities prior to inclusion/exclusion into the portfolio, our research driven approach views fundamental analysis as a three pronged approach: free cash flow (earnings before, interest, taxes, depreciation and amortization, or EBITDA, minus the capital expenditures necessary to grow/maintain the business); earnings per share trends; and private market value (PMV), which encompasses on and off balance sheet assets and liabilities. Our team arrives at a PMV valuation by a rigorous assessment of fundamentals from publicly available information and judgement gained from meeting management, covering all size companies globally and our comprehensive, accumulated knowledge of a variety of sectors. We then identify businesses for the portfolio possessing the proper margin of safety and research variables from our deep research universe.
Class I USD – LU1216601648
Class I EUR – LU1216601564
Class A USD – LU1216600913
Class A EUR – LU1216600673
Class R USD – LU1453359900
Class R EUR – LU1453360155
Disclaimer:
The information and any opinions have been obtained from or are based on sources believed to be reliable but accuracy cannot be guaranteed. No responsibility can be accepted for any consequential loss arising from the use of this information. The information is expressed at its date and is issued only to and directed only at those individuals who are permitted to receive such information in accordance with the applicable statutes. In some countries the distribution of this publication may be restricted. It is your responsibility to find out what those restrictions are and observe them.
Some of the statements in this presentation may contain or be based on forward looking statements, forecasts, estimates, projections, targets, or prognosis (“forward looking statements”), which reflect the manager’s current view of future events, economic developments and financial performance. Such forward looking statements are typically indicated by the use of words which express an estimate, expectation, belief, target or forecast. Such forward looking statements are based on an assessment of historical economic data, on the experience and current plans of the investment manager and/or certain advisors of the manager, and on the indicated sources. These forward looking statements contain no representation or warranty of whatever kind that such future events will occur or that they will occur as described herein, or that such results will be achieved by the fund or the investments of the fund, as the occurrence of these events and the results of the fund are subject to various risks and uncertainties. The actual portfolio, and thus results, of the fund may differ substantially from those assumed in the forward looking statements. The manager and its affiliates will not undertake to update or review the forward looking statements contained in this presentation, whether as result of new information or any future event or otherwise.
Pixabay CC0 Public Domain. Julius Baer nombra a Yvonne Suter como su nueva directora de Sostenibilidad Corporativa e Inversión Responsable
Effective November 4th, 2019, Yvonne Suter took over as Head of Corporate Sustainability and Responsible Investment of Julius Baer. In this role, she is responsible for further developing the CSRI strategy of the Group across all business areas. She reports to both the CEO Office and the Bank’s Sustainability Board.
Yvonne Suter joins Julius Baer from Credit Suisse, where she was Head of Sustainable Investment for the 5 past years and had held several leadership and management roles since 2005. She holds a Master in International Affairs and Governance from the University of St. Gallen.
Philipp Rickenbacher, CEO Julius Baer said: “I am delighted that we have been able to appoint Yvonne Suter, a proven expert, as the new Head of Corporate Sustainability and Responsible Investment. Thanks to her comprehensive knowledge and network, as well as her many years of experience, she has all the prerequisites for further developing Julius Baer in the areas of sustainability and responsible investment and expanding the Bank’s activities. This will further enable us to meet the ever-increasing demands in all aspects of sustainability: economic, social, as well as environmental.”
Foto cedidaLeft to right, Mark A. Boyar and Jonathan Boyar. boyar
New York based Boyar Asset Management recently signed an alliance with the Spanish manager Mapfre AM, to benefit from their mutual capabilities and which will boost their businesses. In this interview with Funds Society, Jonathan Boyar, President of Boyar Research – with 11 years of investment experience, and since 2008 relocated to Boyar, where he improves the analysis and management process, as well as being in charge of institutional sales for both the research area and the management service, explains the key points about this alliance and how to plan to make a foothold, with its particular investment style, in the portfolios of the Spanish investor. Above all, because he believes that value will have have its comeback, and will shine again.
You have recently signed an asset management alliance with Mapfre AM. What will Mapfre AM bring to Boyar AM and what will Boyar AM bring to Boyar AM after the agreement?
The entire team at Boyar Asset Management is excited about entering this partnership. With Mapfre not only do we gain access to long-term patient capital allowing us to make equity investments for the long term, we will also be able to leverage their significant distribution capabilities. We are also looking forward to access to Mapfre’s expertise in both ESG investing and European equities which are two areas that interest us greatly.
Through this strategic partnership, Mapfre will gain access to our expertise in long-term catalyst driven value investing which we have been practicing since 1975. Mapfre will also gain from the knowledge of our team of seasoned investment professionals.
Is Boyar AM looking for greater expertise in European equities thanks to Mapfre?
While we currently do not have plans to launch a European product, it is certainly something we are seriously considering as we grow. We look forward to beinging able to leverage Mapfre’s expertise in this area when the timing is right.
And are you also looking for ESG capabilities? Do you think it’s a trend with potential?
ESG is here to stay. It certainly is not a fad. Many well-respected money managers have adopted this practice and we look forward to benefiting from Mapfre’s already significant capabilities in this area.
With this alliance, will Boyar AM also seek to position itself in the Spanish market?
Absolutely. We plan on utilizing Mapre’s distribution network in Spain to target the Spanish market. We think this audience will embrace a long-term value-oriented investment style.
Boyar AM is a value asset manager and it will offer Mapfre its expertise in asset management in the US. What characteristics distinguish its investment style from other value houses, what characterizes its investment methodology in the US?
Boyar is quite different than most money managers as we take a private equity approach to public markets. Since 1975, our flagship publication (which through another entity we sell on a subscription basis), Asset Analysis Focus (AAF), has been read regularly by some of the world’s most sophisticated investors. In keeping with AAF’s mandate of uncovering undervalued stocks, we use that same research to build and manage individualized portfolios for our money management clients. Many money management firms claim to do their own research—but we can prove it.
Based on that research, we invest in companies whose stock is trading significantly below what we believe the entire company is worth—believing that within a reasonable period of time, the stock market will reflect (or an acquirer will purchase the company for) its intrinsic value.
Unlike many value managers we are focused on identifying catalysts that we believe will help the stock ascend in value over a reasonable period of time. We believe by identifying these catalysts it helps us to avoid value traps.
Is it difficult now, with valuations at high levels in the US, to look for opportunities, undervalued companies? In this sense, what levels of liquidity do you have in your funds?
While the overall market is somewhat expensive by historical standards. We are finding many names in the small and mid-cap area that are selling at significant discounts to what we believe the company is truly worth. This market has been led by a handful of mostly mega cap technology shares, at some point the leadership will change and we believe investors like us that stick to their style through both think and thin will be rewarded for their patience.
Value is not at its best… the performance has been bad compared to growth in recent times. Why and do you think this situation will change in the short term?
2019 has been yet another year when growth stocks have simply trounced value shares. The outperformance was consistent across all market capitalizations. The most expensive stocks continue to get more expensive, while the cheapest companies utilizing any acceptable metrics keep getting less expensive. At some point this trend will reverse course, as it always does. We just can’t predict the timing. On an absolute basis, value shares (just like prior to the dotcom crash) have posted respectable numbers but compared to growth stocks they significantly underperformed. Value investors were rewarded for their patience after the dotcom bubble burst and value investing enjoyed a renaissance. We see no reason why history will not once again repeat itself.
In Spain in recent years, managers have emerged with this style of investment and a lot of talent (Cobas AM, Magallanes, azValor, Horos AM …): do you know Spanish talent? Do you have any Spanish manager value among your references?
These are certainly people I know of by reputation and I have spoken at conferences where they have also presented, but I unfortunately do not know them personally. I would welcome the opportunity to meet some of them.
In an environment of increasing competition and polarisation in the asset management industry (and where scale matters more than ever)… do you believe that alliances are a good alternative to mergers between entities?
Anytime two smart organizations are able to share knowledge, ideas and best practices it is a win for everyone involved.
Do you think we will see a lot of M&A in the sector? Is a strong consolidation necessary? Or will we see more alliances and cooperation as a way of joining forces in this scenario?
I think due to compressing margins there will certainly be consolidation in the sector. Scale certainly matters, but I also think investors appreciate boutiques like ours that are able to invest outside of the mainstream. They understand as the great Sir. John Templeton once said, “If you buy the same securities everyone else is buying, you will have the same results as everyone else.
Should investors hold negative-yielding bonds?
