The Investor
Jackson Yeow – IntrinSiX Capital
Jackson Yeow is the Director at IntrinSiX Capital Inc, a long-only public equity fund with the objective to provide their investors with an attractive risk adjusted return with a long-only long term approach by investing in public listed-companies with clean balance sheets and the potential for growth.
What was the first stock you ever bought?
I can’t remember exactly which stock it was, but I remember it was more than 10 years ago and I was a 3rd year undergraduate and thought I was investing when it was just careless, risky short-term trading. The thing was that I made money on that first trade, and so started me on a short slippery slope where I eventually lost all small gains in one big loss. Thankfully, that only wiped out my gains and not my principal. So I learnt an important lifelong lesson to gain proper investment knowledge and wisdom.
The first business that our fund invested in then, a more meaningful discussion, is a condiment business listed in Asia Pacific. They have a critical 40% market share in the industry, and an overwhelming 80% market share in a key segment. Their sales and profits have been improving steadily for the past decade, while their balance sheet which was once high-ish in debt has improved drastically due to the improved capital allocation decisions.
These core fundamental improvements enabled them to launch a new, more profitable niche some 8 years ago, which took a few years to finally breakeven, thereby catapulting their core earnings higher even as the pandemic ravage businesses globally. Interestingly, at this dire moment, they are doubling the capacity for this new niche and riding the wave to win more business while their distracted peers battle the crisis.
I say this is the first business we invested in, because we are still holding on to the hugely profitable position and know their best years are still ahead of them. They were P/E 12x when we invested in them some years back, but are now at P/E 8x even after appreciating considerably, due to their improved earnings. They are one of the few good businesses still at investable valuations.
What is your firm’s investment philosophy?
We are value-based long-term investors – not in the sense of “value” in the rampantly-misused “Value Investing” paradigm, but in the proper appraisal of noteworthy value-based businesses out to improve and uplift human lives.
For instance, a “stupid” or “boring” healthcare service business providing services to Prevent health issues, charging at inclusive and inexpensive rates, running at optimal efficiency, with decades of good track record, is more attractive to us than a “sexy” or “opportunistic” hospital chain charging an arm and a leg to Cure only ultra-rich overseas patients while their own people perish by the roadside.
How does one appraise an innate value that money simply cannot replace?
We like to say our portfolio companies’ management teams are kinda crazy – and I mean it as a compliment – they are out to make money, as all businesses should be, yes. But there is something else inspirational about these humans, where they leave a positive mark behind long after they are gone, sometimes even without proper recognition, such is their preferred legacy.
We have a long-term view and QARP perspective to investing – Quality At Reasonable Prices. We focus on paying reasonable or cheap prices for high quality businesses and prefer to hold on for the long ride as these irreplaceable businesses compound for years and decades.
How are you managing the current COVID-19 situation on the personal front and on the business front?
On the business front, our fund was launched on 1 April 2020, right in the midst of the pandemic! That in itself is miraculous. Although we are a young seed, we have thankfully gained the right nutrition and guidance to grow onwards.
We sleep soundly at night knowing entire countries will fall before our portfolio companies flinch. In the month of March, when entire markets melted down by 20 to 40%, the market was kind to us and our portfolio companies went up 5%.
We are long-only, long-term investors; so we did not short the market nor trade opportunistically in that two months.
Our portfolio companies went up because of their utmost focus on innovation and real value creation in serving their communities, our portfolio companies are gaining while their peers are busy fire-fighting amidst the pandemic. Consumers simply prefer them because their awake-ness leads them to the better value proposition in exchanging their money for products or services.
And with their deep sense of financial discipline, our portfolio companies can and are investing in their future growth and core foundations while the others falter under the weight of decades of financial malpractice, such that even when interest rates are at historical lows, these others cannot utilise the cheap helicopter money anymore because their financial sink-holes has been revealed and the whole house has disappeared.
On the personal front, I’m thankful to be able to take care of my parents and be taken care of by them, and continue to learn from them (we stay in a modest home that I bought 3 years ago). My hair is growing to historical length and I miss the occasional Chendol, a must-try local dessert. I absolutely miss Church gatherings, worship sessions, Bible study sessions, and my Church friends. In many senses, the pandemic is a mirror reflecting and showing us what truly matters, what has been taken for granted, and to remind us who we are.
What are the top 3 qualities any good investor should have?
First, true to self – know where your boundaries are, and therefore not to step out of it too much, know when to demolish your ego and admit you are wrong, or if you got it right by chance, to admit it.
Secondly, patience – investment success comes from real-life executional success, and the latter still takes time. Even if attention life-spans have now “evolved” and we expect success yesterday, real and enduring success still entails doing the small things right, setting the proverbial flywheel in motion, and pushing it in the right direction over a long enough period of time.
Third, courage of conviction – there will be times when you are zigging while everyone is zagging. Hence you need courage of conviction, not for the blind sake of being contrarian, but by virtue of your deep research and understanding where your boundaries are (back to point one).
Bonus: Fourth, insatiable sense of intellectual and business curiosity – this is important, but the afore three are topmost. A good investor understands what he invests in, from both an intellectual paradigm and from a business sustainability perspective. You need both legs to march the arduous 32km route march.
What is your favourite book?
Poor Charlie’s Almanack by Charlie Munger is an absolute must-read for any humans who proclaim they are an investor. Must. I respect Mr Munger greatly and like how he ties broad, seemingly exclusive, yet intricately-connected and often neglected paradigms to the world of investment.
For instance, how do we know a “sexy theme” is a fad or an enduring success? On that note, if there is a long queue for a product, or if it was sold out, does that automatically mean the parent company is a buy? To know this, we need to understand, among many factors, the psychology of consumers, and I might further suggest, the psychology and intent of the people behind it!
Note I used the word “people” and not “management”, because sometimes there are external parties advising sexy themes to happen along carefully watched calendars so as to encourage share prices to go certain ways.
“So when circumstances combine in certain ways—or more commonly, your fellow man starts acting like the magician and manipulates you on purpose by causing your cognitive dysfunction—you’re a patsy.” – Charlie Munger, 1994, A Lesson on Elementary Worldly Wisdom As It Relates To Investment Management & Business.
Which industries in Australia have caught your interest?
It is the same type of companies that attract us in Australia as in other parts of the world – the well-run, financially disciplined, beloved company that has a good track record and are beloved by their end consumers. The healthcare device that conquered 70% of global market share, helping human sense again; the unnoticed home-improvement device that revolutionised an entire home repair industry; the backend software that has a 90% stranglehold on critical data insights in a beaten down industry. We are obviously speaking in cryptic messages and it takes highly aligned investors to decrypt them but if you are an Australian investor you definitely know these businesses better than us!
The issue is, with all these free money gushing through the water taps, many of their valuations are at historical highs even as the real impact of the current pandemic is yet to be truly felt yet, so we are treading carefully, also bearing in mind the currency strengths of any countries we invest in.
How can people connect with you?
Email:
Website: http://www.intrinsixcapital.com/
Helen Fisher is the Managing Director and CEO of Bio Capital Impact Fund (BCIF) – a fund that maximises return on investment in the Fund by employing five strategies:
• “picking winners” using our screening and selection methodology
• providing continuity of capital to investee companies on achievement of agreed milestones
• providing strategic support for investments, maximising success and reducing time to market
• being tax efficient at evely level, including utilising tax incentives for investee companies and investors available in various jurisdictions
• making and utilising expected and unexpected connections between investments.
What was the first stock you ever bought?
I bought CSL (ASX:CSL) back in 2009 when the company’s market cap was roughly $15B. Although a fair way from its current market cap of $130B, it was already the leading biotech company in Australia. I understood their business and their product well. It was attractive that CSL had essentially a monopoly on plasma blood products, something that will always be needed. I believed in the story, the product and the company and was reassured by the fact that they had the same CEO since 1990 (Brian McNamee left the company in 2013 before rejoining as Chairman in 2018). To me it was a great Australian story that went global and has now been proven by time.
On the same day, I also purchased shares in Apple. During our regular weekly family dinners, we would find conversation eventually turning into debate of Apple vs “The others”. What made my husband and I decide to invest into Apple was the passion with which its customers defended and promoted the company’s products. We figured that, if consumers felt this strongly about a particular brand, they must be doing something right. Our logic proved to be correct.
What is your firm’s investment philosophy?
Our fund is focused on health, though with a more holistic approach to “health”. In addition to the more traditional areas, such as drug development, medical devices and healthcare services, we also look at technologies capable of impacting our food, water and air, acknowledging that these are also key contributors to our health outcomes. Our fund is global, evergreen and invests across both public and private sectors. Our philosophy is to predict the technological trends that will shape our future, find the best companies within those trends and actively work together with them, leveraging our broad expertise, global networks and strategic partnerships to help them grow. We truly believe that we are entering the era of healthcare (only further amplified by COVID) and BCIF is a unique vehicle designed to maximise returns on investment in this sector.
How are you managing the current COVID-19 situation on the personal front and on the business front?
In this environment, the personal and business fronts are somewhat mixed, given that we have been working and studying from home for the last 6 months. I am grateful that we are all healthy and are looking forward to the restrictions loosening in Metropolitan Melbourne, where I am based.
Like most others, we definitely felt the initial shockwave around February-April of this year. Generally, most markets have fully recovered (many even surpassing pre-COVID levels). Melbourne, where a number of our team members are based, is still in lockdown, which makes travel impossible. We have adapted and made it work for us – working from home, using various web-based communication solutions and cloud services. It’s an interesting time and certainly one that has brought about much change to the way we think about business and working environments.
What are the top 3 qualities any good investor should have?
- Ability to undertake the difficult and time-consuming analytical work required to take out as much of the guesswork as possible from investment decisions.
- Persistence in sticking to your investment strategy, even if it means weathering a few storms, while also …
- Knowing when to cut your losses.
What is your favourite book?
Atlas Shrugged by Ayn Rand
Which industries in Australia have caught your interest?
Health, broadly defined. As I mentioned above, we are entering the era of health. We expect that governments are going to ramp up health-related funding at all levels, investors will become more attuned to the immediacy and impact of health investments and there will be a plethora of new ventures in healthcare and life sciences seeking to explore the increases in both government funding and investor demand. This was true prior to COVID but, in our view, has only been solidified this year. Without health, we have nothing, and spending on medical interventions is unfortunately, in most cases, non-discretionary. This is a sector that, in addition to having a large-scale positive impact on society, can offer extraordinary financial returns.
How can people connect with you?
Email:
Website: www.bcif.com.au
Scott Williams is the Chief Executive Officer & Chief Investment Officer of Fiftyone Capital – an experienced financial services professional specialising in stock selection, portfolio management and corporate advisory.
What was the first stock you ever bought?
Cervantes Gold, I bought it when I started work experience at a broking firm and this was the ‘hot stock’ at the time. Pretty sure I lost about half my very small investment on it. First trade, a loser!
What is your firm’s investment philosophy?
To preserve and grow our capital over time. We do this by investing with conviction in our best ideas while mitigating downside risk by short selling the worst companies.
How are you managing the current COVID-19 situation on the personal front and on the business front?
We saw the virus spreading very early as we are a global fund and follow international news. We started reducing our exposures significantly which helped us navigate the market fall very well. As our business runs from the cloud, we managed the work from home part very easily.
What are the top 3 qualities any good investor should have?
Ability to think for themselves and not follow the crowd, having conviction to back their ideas and be able to get out, take your medicine and move on if they get it wrong.
What is your favourite book?
So many. I tend to like personal development and finance books. So Extreme Ownership by Jocko Willink and Billion Dollar Whale by Bradley Hope I thought were excellent recently.
Which industries in Australia have caught your interest?
Australia is such a small part of the global investment markets. But we do really like a couple Aussie biotech stocks that we have written about quite a lot (PAR & IXC). Relative to international peers some of these companies trade well below valuations we think they could once they get further along the commercial development pipeline. Being in Australia they are probably under the radar… for now!
How can people connect with you?
Email:
Website: https://www.fiftyonecapital.com/
Tony Locantro is the Investment Manager at Alto Capital, an independent investment and advisory firm, located in West Perth. Founded in 2004, Alto has a well-established track record of building clients’ wealth, successfully listing private companies on the ASX and completing capital raisings for both private and public companies, including start-ups.
What was the first stock you ever bought?
AWA who did the totaliser board at racetracks and electrical products on the recommendation of a broker I sourced from the yellow pages. It was around the time of Kurt Cobain’s death when I really became keen on the market. My second stock Eagle Mining was far more successful. I was green at the time and walked into the broking office with cash. It was certainly embarrassing.
What is your firm’s investment philosophy?
We specialise in small caps and have seeded two recent biotech IPO’s. Our aim is to support companies, and not adopt the fee and flip model that tends to plague small companies. As advisors we’re all small business owners and are responsible for our own decisions but being aligned leads to greater discussions, ideas and eventually corporate transactions. I’m only really focussed on companies with 400-500% upside potential balanced by halving at some stage. Advising in speculative stocks and small caps is more difficult than people think and to an extent it’s what you don’t see or know that ultimately will lead to growth and success.
How are you managing the current COVID-19 situation on the personal front and on the business front?
I’ve been advising 22 years now, and it never feels like work. Working from home and close access to the fridge and lounge I’ve finally overcome. I’m now working 4 days per week in the office and it’s great to have my routine back. Market wise I haven’t been this busy in a long time. A number of my stable are running and nearing critical share price catalysts. Finally, I feel as though I’m at the top of my game, and my decision making for clients as a result is assertive and successful. I miss having a wine at a bar socially and with business associates. My kids are bored and have fallen in love with Fortnite again. I think it’s time to hit the park and kick the football around or even walk around shopping centres.
What are the top 3 qualities any good investor should have?
The ability to walk away from the screen with patience to let a story evolve, to make decisions on the spot when I’m already pre-empting the order, I’m likely to enter onto the market. Another trait is to be able to let go and enable me to make suggestions that they may not feel comfortable with.
What is your favourite book?
Models “Attract Women Through Honesty” by Mark Manson is probably the best self-help book for men in particular. It has certainly helped me along the way, especially on my dealings with people and how to match my clothing choices. It’s Marks best book in my opinion and my meeting with the head of Pan McMillan I believe had something to do with it being republished in Australia.
Which industries in Australia have caught your interest?
Biotech across regenerative medicine, diagnostics, high risk/high reward exploration in base and precious metals along with uranium which seems to be the “contrarian” play yet again.
How can people connect with you?
Email:
Website: https://www.altocapital.com.au/
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