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FT Article: 'A multi-asset generalist is the kiss of death' - Jon Little
Interesting read in the financial times (FTfm) about a UK firm (Northill Capital run by Jon Little) that buys majority stakes in boutique investment companies, including one offering US mutual funds (Riverbridge Partners). Their strategy seems to remind me of some individual investment strategies at MFO.
Cannot pull-up the Little (little?) article. When I close the overlaying subscription ad, the entire article disappears. Should I pay a buck to purchase copy of FT at Amazon? Is it that good?
Sounds intriguing. Suspect the article argues against diversification and promotes assets that are currently in vogue. That would currently mean certain equity and bond sectors, mostly of U.S. domicile, I presume.
If you view investing with a broader sweep - say in 25-40 year time spans, you may be surprised how different sectors come and go. That's true of equities, high grade bonds, junk bonds, houses, rental units, ocean-front property, farmland, oil, gold, Swiss Francs and other foreign curriencies - as well as of railroads, technology, banks and airlines. Things change. Diversification won't get you the best returns on capital at any particular time in history. It may however help even-out the bumps longer term.
Can't pull up the article, but isn't Affiliated Managers (AMG) the same concept, on a very large scale? They own or own stakes in Yacktman, AQR, ValueLine, Third Avenue and tons of others. I've thought about investing in that, but wish it paid a div.
Sorry for the FT post. I think they allow you to read one article (first click rule), so if you clear your cache you may be able to read it. But it is a short article and you shouldn't have to pay for it.
Here is one other older interview with similar thoughts though:
NorthHill likes to buy small firms that focus on investing and aren't just trying to increase AUM. a few blerbs from the two articles:
This ones for you Scott: Likewise, Mr Little argues Affiliated Managers Group, a big US-listed multi-boutique with assets of $617bn, is stuck on a hamster wheel of relentless expansion.
“AMG has 30 managers in its portfolio. They have to do that. They have a premium [stock market] rating because they are a growth stock. When they stop doing that, they go to a [price-to-earnings ratio] of 13-14 rather than 18-19, so the managers can’t stop. They will lose their premium rating and lose their jobs.”
"We would rather invest in people that are consistently closing to new business,” he says.
Speaking about one of the firms they own: “But they are also incredibly profitable. They don’t have marketing people or advertising or a corporate strategy department. Everyone in the firm is focused on asset management.”
Speaking about the types of firms they want to own: “They are the unsung heroes of asset management. They don’t advertise, they don’t want money, they are not launching new products, so you very rarely see them in the press.”
To summarize, they are looking for some of the same things that I am in a MF company. good performance Focused willing to close to new investors low profile / doesn't advertise small size company doesn't want to own more than 10 and serves one the board of each that they own ( i broke this rule, but i have dropped a couple this past year)
Comments
Should I pay a buck to purchase copy of FT at Amazon? Is it that good?
Sounds intriguing. Suspect the article argues against diversification and promotes assets that are currently in vogue. That would currently mean certain equity and bond sectors, mostly of U.S. domicile, I presume.
If you view investing with a broader sweep - say in 25-40 year time spans, you may be surprised how different sectors come and go. That's true of equities, high grade bonds, junk bonds, houses, rental units, ocean-front property, farmland, oil, gold, Swiss Francs and other foreign curriencies - as well as of railroads, technology, banks and airlines. Things change. Diversification won't get you the best returns on capital at any particular time in history. It may however help even-out the bumps longer term.
Here is one other older interview with similar thoughts though:
http://www.pwmnet.com/Wealth-Management/Profiles/Northill-brings-a-little-focus-to-asset-management-world?ct=true
NorthHill likes to buy small firms that focus on investing and aren't just trying to increase AUM. a few blerbs from the two articles:
This ones for you Scott:
Likewise, Mr Little argues Affiliated Managers Group, a big US-listed multi-boutique with assets of $617bn, is stuck on a hamster wheel of relentless expansion.
High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email [email protected] to buy additional rights. http://www.ft.com/cms/s/0/a18d69ee-9b1a-11e4-b651-00144feabdc0.html#ixzz3QR6lNq7w
“AMG has 30 managers in its portfolio. They have to do that. They have a premium [stock market] rating because they are a growth stock. When they stop doing that, they go to a [price-to-earnings ratio] of 13-14 rather than 18-19, so the managers can’t stop. They will lose their premium rating and lose their jobs.”
"We would rather invest in people that are consistently closing to new business,” he says.
Speaking about one of the firms they own:
“But they are also incredibly profitable. They don’t have marketing people or advertising or a corporate strategy department. Everyone in the firm is focused on asset management.”
Speaking about the types of firms they want to own:
“They are the unsung heroes of asset management. They don’t advertise, they don’t want money, they are not launching new products, so you very rarely see them in the press.”
To summarize, they are looking for some of the same things that I am in a MF company.
good performance
Focused
willing to close to new investors
low profile / doesn't advertise
small size company
doesn't want to own more than 10 and serves one the board of each that they own ( i broke this rule, but i have dropped a couple this past year)