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Dr. Stephen Fisher – First Degree Global Asset Managment

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The Investor - Dr. Stephen Fisher is the Chief Investment Officer of First Degree Global Asset Managment

Dr. Stephen Fisher has twenty five years’ experience as an investment professional with leading investment management groups in the United States, Asia and Australia. Immediately prior to co-founding First Degree in 2011, Stephen was the Head of Global Fixed Income Product – Asia Pacific at JPMorgan Asset Management, and had investment responsibility for the firm’s mandates from Central Banks, Sovereign Wealth Funds and some of the largest Institutions in the Asia Pacific Region.

What was the first stock you ever bought?
My father had been to an investing seminar in 1971 and had purchased a few shares (Woodside Petroleum, Stanley Tools and something else) and he gave me the task of looking up the sharetables in the newspaper every morning. He was teaching me how to read, I suppose, but the columns and columns of numbers completely captivated me. How were these prices determined? What do they mean? People make and lose money because these columns of numbers go up and down. My entire life has been spent trying to understand these numbers, where they come from, where they are going to, how to make optimal use of them etc etc. I still don’t understand much of it actually, the sharetables are now on Bloomberg, but what they mean is still a mystery…

…so I decided to try the stock market game myself in 1971. I purchased 100 shares of stock in Travelodge Ltd (a motel chain) at 42c per share. They went down to 35c for a few months but then Tan Sri Khoo from Malaysia purchased the company for 70c. Greenmail!

What is your firm’s investment philosophy?
The usual labels (growth, value, garp, blah blah, blah) dont reflect the way I think about investments. I start by assuming that everything is efficiently priced which means I am indifferent between the particular security or the market. Market risk premia for the asset classes are important (Equity premia, bond premia, property premia etc) and some combination of this is where I want to be. Individual securities contain these risk premia in some proportion but they also have their own story and the CEOs of these companies spruik their business’s special characteristics. I like to think whether the probability distributions for these characteristics have been correctly identified by the market or, if not, what that distribution should be.

How are you managing the current COVID-19 situation on the personal front and on the business front?
Covid19 is just another panic and we have lived through them before and will encounter more in the future.

The interesting aspect is that the market got the probability distributions for Covid19 very wrong initially, thereby precipitating a deep decline in the global stock markets. I say this because the two key inputs in the production process, Labour and Capital, are virtually unaffected. The death rate is not that high so the reduction in labour supply is almost zero. The capital stock does not get sick so this remains intact. On this basis the economic impact should be minimal.The government response has been dramatic but, let’s face it, 4 to 8 weeks working from home is hardly a penalty – GDP may fall 5% or something in Q2 but it will be earned back in Q3 or Q4.

The probabilities being applied to economic decline were completely astray initially. The market was pricing a 20% death rate or something outrageous. The market finally worked out the distributions a few weeks ago and the market is up 30% since that epiphany.

On the personal side, I remember the Westerns where John Wayne would be escorting new settlers through Apache territory and when suddenly faced with an attack by the natives, the Duke would command the wagon train to ‘form a circle’. This was apparently an effective defensive tactic. I don’t want to catch the virus so I have followed the Duke’s advice and formed a circle with the family wagon train.

What are the top 3 qualities any good investor should have?
Good investors need to strike at an opportunity when it presents itself. Markets are pretty efficient so you cannot just expect to go and buy something cheap tomorrow nor can you read balance sheets or other public information and expect to find a winner. The world is stochastic and every now and then something presents itself that just makes you sit up and think, ‘…why is this not right?’ The trick is then actually backing your insight. Having the ability to see an aberrant price and also hitting that price is what makes investors stand out.

What is your favourite book?
My favourite book is Foundations of Finance by Eugene Fama. It is riotously funny how Fama can show you a distribution of return that is far from being Normally distributed and then he goes on to claim that its “…close enough to Normal…” for him to force his conclusions on the rest of us. Its arguably the Bible of empirical finance and like any religious text it is full of fictions.

Which industries in Australia have caught your interest?
I am intrigued by the micro-cap market in Australia. I term it the “…listed Venture Capital…” market. Basically, the microcaps have decided to shun the traditional private capital VC approach and have raised money for their startup in the public space. These companies don’t seem to perform very well from the share price perspective but their promoters swear by going public early rather than later. One can shop around this market for software technology, fintech, biotech, manufacturing, mining explorers to name a few. It’s like a bazaar and the best part is that the companies all play by the same rules that big public companies adhere to. That makes me feel much safer than chancing my luck in the shark tank that is Silicon Valley!

How can people connect with you?
Email:
stephen.fisher@firstdegree.asia
First Degree Website: http://www.firstdegree.asia/

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The Investor

Helen Fisher – Bio Capital Impact Fund (BCIF)

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The Investor - Helen Fisher is the Managing Director and CEO of Bio Capital Impact Fund (BCIF)

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?

  1. Ability to undertake the difficult and time-consuming analytical work required to take out as much of the guesswork as possible from investment decisions.

  2. Persistence in sticking to your investment strategy, even if it means weathering a few storms, while also …

  3. 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:
hfisher@bcif.com.au
Website: www.bcif.com.au

 

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The Investor

Scott Williams – Fiftyone Capital

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The Investor - Scott Williams is the Chief Executive Officer & Chief Investment Officer of Fiftyone Capital

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:
scott@fiftyonecapital.com
Website: https://www.fiftyonecapital.com/

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The Investor

Tony Locantro – Alto Capital

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The Investor - Tony Locantro, Investment Manager at Alto Capital

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:
tony@altocapital.com.au
Website: https://www.altocapital.com.au/

Tony Locantro On Proactive’s “Bulls, Bears & Brokers” Aired On 27 February 2020

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