Hello and welcome to the Rules of Investing, brought to you by Livewire Markets, I’m your host David Thornton.

On the upcoming episode I sit down with Ray David, Portfolio Manager and Partner at Blackwattle Investment Partners. Alongside Joseph Koh, Ray runs Blackwattle’s brand new Long-Short Quality Fund.

Ray has a red flag system for identifying his short and underweight positions. He put CSL through the ringer, and as you’ll learn, it spat out a sea of red flags.

He also discusses the Ponzi scheme that sparked his interest in investment finance, why he’s bullish BHP irrespective of the commodity cycle, and the media company with the best suite of assets on the ASX.     

Here’s a preview of what you can expect. 

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A quick note to our loyal listeners. This is the first episode in our long-standing series that has been supported by a trusted partner of Livewire, Bell Direct.

Research shows that experienced investors are looking for an edge. As the first-ever sponsor of Livewire’s “Rules of Investing” podcast, Bell Direct is offering exclusive access to 3 current Bell Potter stock reports every week for a limited time. To claim, hit up belldirect.com.au and look for the Livewire logo.

Livewire Live is an investor event like no other where Australia’s most experienced investors will debate the critical topics in markets right now.

It is set to be an unmissable event with an exceptional lineup of speakers and innovative formats. Tickets will sell out, secure your spot here. 

We will be announcing additional speakers in the coming weeks.

• Robert Millner, Chairman, Washington H Soul Pattinson

There is a good reason why Australia’s sovereign wealth fund, the Future Fund, maintains a 16% allocation to private equity. Returns, returns, returns.

Private equity, and the lucrative returns it offers, has traditionally been the restricted domain of institutional investors and off limits to retail investors.

Ellerston Capital's JAADE Private Assets Fund bucks that trend by offering retail investors exposure to unlisted Australian growth companies. Like private equity, JAADE’s managers act as a partner with the companies it invests in by holding a space on their respective boards.

It’s a model that clearly works.

As of June this year, the retail fund has returned 14.48% pa over three years and almost 18% per annum since inception.

In today’s episode, Livewire's David Thornton sits down with Jayne Shaw, Investment Director at Ellerston Capital and analyst for the JAADE fund. Jayne didn’t take the typical road into funds management. Initially trained as a nurse, she went on to take a number of roles in leadership positions in healthcare organisations. This appropriately explains why Jayne looks after the healthcare allocation within the JAADE fund.

She also explains why the “carpark indicator” is a great way to know when the deals are on in private equity. 

Topics include:

• the evolution of private equity over the last few years,

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If there is one request that we repeatedly receive from our audience, it’s that you want more content on the wonderful, often under-covered world of microcaps. 

It makes cents (literally). These stocks usually fly under the radar of the masses, providing diligent investors with the opportunity to invest in mispriced stocks and generate capital growth over the long term. 

However, investing in this area of the market comes with its risks. In 2022, the S&P/ASX Emerging Companies Index suffered a brutal blow (it fell 24%), with one Livewire contributor describing it as a "killing field". This year, however, the Index has lifted around 3%, but it hasn't been a tide that has lifted all boats. 

So in today's episode, we're joined by microcap expert Jessica Farr-Jones, the portfolio manager of the Regal Emerging Companies Strategy*. She shares why she is feeling bullish about the opportunity in small and micro caps, some of the stocks that have her excited, as well as a deep dive into what small and microcap investors can expect this reporting season. 

And yes, if the last name sounds familiar, she’s the daughter of Wallabies great Nick Farr-Jones, who now also works in funds management as a mining specialist.

*Note: This strategy is only available to wholesale investors. However, around 25% of the Regal listed investment trust (ASX: RF1) is exposed to the Emerging Companies Strategy, which investors can access on the ASX. 

In the upcoming episode of The Rules of Investing, we're joined by microcap expert Jessica Farr-Jones, the portfolio manager of the Regal Emerging Companies Strategy*.

She shares why she is feeling bullish about the opportunity in small and micro caps, some of the stocks that have her excited, as well as a deep dive into what small and microcap investors can expect this reporting season. 

Here's a preview of what you can expect. 

Value investing is all about buying stocks that are trading below their intrinsic value. 

In practical terms, that often involves investing in companies and sectors that have been shunned by the market due to particular macro headwinds. 

"It should be no surprise as to where the pockets of opportunity are," says Tim Carleton, Auscap Asset Management CIO and today's guest on the Rules of Investing. 

"They're in the more cyclical sectors that people are most concerned about from an earnings perspective."

In today's interview with Livewire's David Thornton, Tim runs through two retail stocks in the Auscap Long Short Australian Equities Fund that fit this profile. I won't give them away, but one is the only stock on the ASX with a return on equity above 50%, while the other is a long-term compounder poised to take market share. 

He also discusses why he's avoided the tech and energy sectors, what he expects from earnings season, why he doesn't put much weight in earnings beats and misses, and why lithium is a crowded trade (yet remains invested in it). 

Note: This episode was recorded on July 26, 2023. 

Timestamps

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A year ago I sat down with Oscar Oberg, lead portfolio manager at Wilson Asset Management. His thesis then was that small caps were beaten down and due some mean reversion.

Alas, small caps haven’t done much since then, with the Small Ords returning 3.91%. Yet Oscar’s thesis also remains unchanged. 

In fact, it’s gotten stronger!

Not only is he positioning for a rebound in smalls and microcaps, he’s doing it with overweight exposure to consumer discretionary, a sector that has been tarred and feathered by today’s macroeconomic landscape of high inflation and high rates. As Oscar puts it, “there’s no mean reversion without consumer discretionary.”

In today’s episode, Oscar lays out this thesis and the companies that make it up. 

He also discusses:

• the relationship between the tech rally and small caps;

Note: This episode was recorded on Tuesday July 20, 2023.

Timestamps

Hello and welcome to the rules of investing, brought to you by Livewire Markets. I’m your host David Thornton.

A year ago I sat down with Oscar Oberg, lead portfolio manager at Wilson Asset Management. His thesis then was that small caps were beaten down and due some mean reversion.  

Alas, small caps haven’t done much since then, with the Small Ords returning 3.91%. Yet Oscar’s thesis also remains unchanged. In fact, it’s gotten stronger!

Not only is he positioning for a rebound in smalls and microcaps, he’s doing it with overweight exposure to consumer discretionary, a sector that has been tarred and feathered by today’s macroeconomic landscape of high inflation and high rates. As Oscar puts it, “there’s no mean reversion without consumer discretionary.”

In the upcoming episode, Oscar lays out this thesis and the companies that make it up. He also discusses the relationship between the tech rally and small caps, generating return with short-term tactical trades, how he deals with low liquidity, and the primed aged care stock currently under takeover.  

Here’s a taste of what you can expect.

Last month, Fidelity marked the 20 year anniversary of its Australian Equities Fund. The fund has consistently outperformed its benchmark, the ASX 200 Accumulation Index, netting over 11% per annum.

Paul Taylor, Head of Investments at Fidelity International, has captained that ship from inception to now.

The fund's generated 11% per annum over the two decades, through some of the worst crises markets have dealt with. The Global Financial Crisis, the European sovereign debt crisis, COVID-19, and the Russo-Ukrainian war. The list goes on.

How's he done it? Well, he turns down the noise. When I speak to fund managers, I often get a general response about how to do that. Usually something about focusing on fundamentals. 

In today’s episode of The Rules of Investing, Paul gives an actionable step by step process that all investors can follow to turn down that noise.

He also goes deep explaining his process for finding what he terms the “holy grail” of investing – long-term compounders, identifies the market’s next buying window, the need to view stocks and their upside potential within the context of portfolio construction, and the next thing to break if rates keep rising. 

And as a little kicker at the end, he provides a [hypothetical] 3-stock portfolio for the bottom drawer. 

Note: This interview was recorded on July 11, 2023. 

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The past two decades have seen a lot of crises that have affected financial markets. The Global Financial Crisis, the European sovereign debt crisis, COVID-19, and the Russo-Ukrainian war. The list goes on.

Last month, Fidelity marked the 20 year anniversary of its Australian Equities Fund. The fund has consistently outperformed its benchmark, the S&P/ASX 200 Accumulation Index, netting over 11% per annum.   

Paul Taylor, Head of Investments at Fidelity International, has captained that ship from inception to now.

In tomorrow’s episode of The Rules of Investing, Paul explains his process for finding what he terms the “holy grail” of investing – long-term compounders. He also discusses the market’s next buying window, the need to view stocks and their upside potential within the context of portfolio construction, and the next thing to break if rates keep rising.

Here’s a preview of what you can expect.