Inside the Rope with David Clark

In this instalment of Inside the Rope, David welcomes Jason Coggins, previous lead of investment research at Koda Capital. Jason delves into the nuances of building investment portfolios, the dynamics of public and private market investments, as well as the importance of choosing the right investment managers.

He underlines the crucial aspect of tailoring portfolios to meet client expectations, ensuring both technical robustness and effective organisational execution. Jason stresses the critical role of client involvement, the wealth of experience, and the synergy between client objectives and manager commitments to their own strategies.

Further, he explores the concept of the opportunistic investment segment, which encompasses strategies with a longer time horizon, advocating for a cautious and methodical approach to capital allocation to mitigate the risk associated with timing in investments. This approach also involves avoiding an over-concentration in sectors like commercial real estate, tapping into global partnerships for enriched investment perspectives, and acknowledging the implications of fund size on performance.

The conversation also covers the pivotal role of a manager's historical performance and the strategic importance of risk diversification within a portfolio as a means to minimise potential losses and sustain returns.

In this episode of Inside the Rope, David is joined by Matt Rennie, joint Managing Director of Rennie Advisory. David delves deep into Matt's extensive experience, from his roots in Darwin and tenure at giants like KPMG and Ernst & Young, to the founding and subsequent sale of his own firm. As a specialist in energy transition, Matt offers a unique perspective on carbon reduction strategies, detailing the intricacies of the energy transition, especially in the wake of global warming.

This conversation is filled with insights into the differences between consulting for small versus large organisations, Matt's personal journey alongside his co-MD and wife, Simone, and his observations from global energy transitions, notably in Europe and the US.

Key takeaways highlight the urgency and complexity of achieving net-zero emissions, with discussions on the rising dominance of electric vehicles, potential pitfalls in renewable investments, and the profound differences made by impact investing. Special attention is given to the innovative technologies bridging traditional energy sources with emerging alternatives and the critical role of soil health in carbon sequestration.

In a somewhat different episode, David engages in a thought-provoking conversation with Jonah Oliver, an esteemed psychologist and performance coach to Australian professional golfer Cam Smith. The episode delves deep into the intricacies of decision-making, values, and the psychology of high performance.

The discussion starts with Jonah emphasising the importance of embracing discomfort as an integral part of the decision-making process. He sheds light on how individuals often shy away from making tough decisions due to their aversion to discomfort, hindering their growth both personally and professionally. Jonah passionately advocates for the need to confront and endure discomfort, asserting that it is a vital component in making choices that align with one's core values.

Jonah also underscores the significance of individuals understanding their own values and introduces a valuable tool, the values finder, to aid in this self-discovery. He explains that values go beyond intentions; they manifest as behaviours that effectively guide everyone’s daily decision-making.

Throughout the episode, Jonah also shares a treasure trove of insights on the necessity of distinguishing between the outcome and the quality of decision-making. He emphasises that success is not always guaranteed, but consistently making decisions in line with one's values ultimately leads to more favourable outcomes over time.

The discussion offers a distinctive perspective on decision-making in diverse fields, from sports to finance, encouraging listeners to utilise their values as a guiding compass for making meaningful life choices. The episode imparts a wealth of wisdom to those seeking to enhance their decision-making skills and attain high performance in both their personal and professional pursuits.

In this enlightening episode, guest Michael discusses the current state and future predictions for the Australian real estate and investment markets, highlighting the challenges posed by projected population growth and supply chain issues. He details how an influx of one and a half million people is affecting housing supply, stimulating discussions among politicians and media alike.

Michael points out the increasing demand in industrial sectors due to the rise of e-commerce and logistics, with a parallel decline in traditional retail spaces, a trend exacerbated by the pandemic. He also touches on the unstable conditions of the office and retail property markets, recommending prudence due to the observed downturns, especially in the U.S.

Michael emphasises the importance of focusing on sectors with robust fundamentals, like residential and logistics, and the need for adaptability in a fluctuating market landscape. He talks about the importance of aligning investment strategies with the ever-changing market needs, such as sustainability and decarbonisation, especially during global upheavals. The conversation rounds off with insights on the necessity of aligning managerial interests and having 'skin in the game', offering listeners an understanding of the ongoing dynamics in Australian investment and real estate sectors.

In this episode, David chats with Justin from Glow Capital Partners about the ins and outs of finance, private equity, and investment strategies. They navigate Justin's career path, touching on the value of patience in investment decisions. The two also dive into the complexities of business valuation and address some common perceptions about private equity investors. Going beyond the stereotype of simply enhancing businesses for a quick profit, Justin explains Glow's dedication to nurturing sustainable, long-term businesses and highlights the role of positive company culture. They wrap up with a brief discussion on Glow's new investment fund and its potential appeal to investors.

Justin Ryan is a Co-Founder and Managing Partner at Glow Capital Partners, a private equity firm with a focus on investing in innovative and growing companies.

Justin began his journey in private equity investment in 1997 with Catalyst Investment Managers and later spent significant time at Quadrant Private Equity. In 2003, he took on a leadership role at the Australian Venture Capital Association, now rebranded as the Australian Investment Council.

Throughout his career, Justin has been involved in 22 private equity investments, with the majority already exited. Several of these investments have garnered recognition from the Australian Investment Council. Beyond his investment work, Justin has operational experience from his time as CEO and Managing Director of Alesco Corporation, a company with a diverse portfolio of industrial brands, which was acquired by Dulux Corporation in 2011.

In this episode, David Clark engages in a detailed discussion with Michael Lukin from Roc Partners about the intricate realm of private equity. Looking forward, Michael provides insights into the anticipated investment surge in 2024 due to overcommitment in private equity investments.

Michael delves into the complex trading process, emphasising the pivotal role of the brokerage market, proactive outreach, and the special bonds formed directly with private equity firms. A significant point to note is Roc Partners' unique advantage in their information, allowing them to capitalise on opportunities that aren't available in public markets. Michael further underscores the firm's commitment to aligning their goals with those of their clients, by investing in the funds alongside clients. The conversation between David and Michael also touches on Roc Partners' distinct fund structure, which includes a four-year liquidity option, designed to adapt to the evolving demands of investors.

In the latest episode of Inside the Rope, David Clark sits down with Mark Barker, Head of International at GQG Partners, a renowned asset management firm. Mark retraces his journey, originating from his early days in London's hedge funds back in 1985, and eventually leading to the birth of GQG in 2016.

Mark also covers GQG's investment strategy, which is anchored in delivering modest performance above the benchmark. Since inception in June 2017, the fund has been able to do this, with returns of 14.10% p.a. net of fees to 31 July 2023, compared to the MSCI All Country World Index's 10.69% p.a. Mark also outlines how GQG develops a comprehensive global perspective, emphasizing the nature of emerging and developed markets, yet also noting the challenges they pose.

The conversation also shifts to GQG's current market analysis, especially the post-pandemic shift from emphasising production to valuing profitability. Additionally, Mark and David discuss the enduring demand for oil, even as the world vigorously marches towards green energy solutions. Reflecting on GQG's decision to divest from tech in 2021, Mark offers a candid insight into the company's dedication to growth and adaptability. Amidst looming uncertainties around the U.S. economy, Mark still exhibits a level of optimism, citing recent economic trends. In concluding the episode, Mark suggests a bright future for active management but emphasises the importance of managing return expectations for clients.

In this episode of Inside the Rope, David is joined by Cooper Stainbrook of Ibex Investors to delve into Cooper’s recent research on commercial real estate and the potential economic risks. The episode begins by addressing the global trend towards remote work, discussing its potential to drive corporations to scale back their office footprints, possibly affecting office property values.

David and Cooper also shed light on the precarious terrain for real estate investors, emphasising sharp declines in property transaction volumes and uncertain asset values. They also discuss the challenges confronting regional banks in the US. These banks have significantly increased their exposure to commercial real estate mortgages, potentially at the least opportune moment. If these banks suffer losses, Cooper argues that we could be looking at broader economic ramifications, including a reduction in credit availability.

Cooper joined Ibex Investors in 2017 to assist with the research and portfolio management of Ibex strategies. Prior to joining Ibex, Cooper was a member of a four-person investment team managing over $4 billion at Edgehill Endowment Partners. Cooper graduated with a B.A. in Economics from Yale University in 2015.

In this episode of "Inside the Rope," host David Clark interviews Frank Macindoe, a Koda Partner & Adviser that oversees the Koda Enduring Equities Portfolio of ASX-listed shares. The portfolio has achieved an impressive compound annual growth rate of approximately 14% p.a. over the past 15 years. Frank delves into the current economic landscape, characterized by the end of a long period of declining interest rates, low inflation, and the pandemic's impact. Despite the prevailing uncertainties, Frank adheres to a long-term investment approach, seeking companies that surpass the broader economy, possess competitive advantages (such as intellectual property or scale), and are not heavily reliant on capital. He emphasizes focusing on companies with growth potential over a five-year horizon.

Throughout the conversation, Frank expresses optimism for healthcare sector companies like Cochlear, CSL, and ResMed, which faced challenges during the pandemic but are expected to thrive as healthcare returns to normal. However, he avoids investments in banks due to increasing regulatory constraints. Frank also voices concerns about rising bond rates and inflation, which could pose challenges for long-term growth companies. Additionally, he mentions potential risks related to China's economy, US politics, and geopolitical tensions. Regarding artificial intelligence (AI), Frank recommends investing in companies that can leverage AI rather than attempting to pick the ultimate AI technology winner. He notes that businesses with a significant workforce may be vulnerable to AI-driven disruptions.

In this episode, David Clark chats with return guest David Witkin, the founder of Beryl Capital Management. They discuss merger arbitrage and event-driven investing, focusing on the current regulatory environment in mergers and acquisitions.

The two discuss the potential merger between LIV Golf and the PGA. Witkin, commented that if it were a public deal, he would be shorting the deal due to concerns about antitrust issues. He mentions that the combination of LIV golf and PGA, which were previously competitors, could be seen as an attempt to eliminate competition, something that the Department of Justice would not allow.

Witkin also shares insights on his fund's performance, emphasizing its compound annual growth rate and alignment of interests with investors. The conversation highlights the importance of experience and research in analyzing deals and managing position sizes effectively. He also discusses the role of antitrust regulators and their impact on deal closures and spread widening. He notes that while some deals may be blocked, the US antitrust system allows for challenges in court, with historically around 50% of blocks being overturned. Witkin emphasizes the need to stay informed by following court cases and dockets. The conversation underscores the less volatile nature of merger arbitrage and the potential for high-risk-adjusted returns.