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building the new Artisan emerging markets team

David_Snowball
in Fund Discussions
Dear friends,

Artisan just announced the hiring of Lewis Kaufman, who had been the lead manager on Thornburg Developing World (THDIX). THDIX is a five star Great Owl. It has a five year record (launch in 2009) and has bested its peers in both up- and down-markets, at least as measured by the three- and five-year capture ratios. The active share is 90 and the five-year beta is 90. From about 2002-14, Mr. Kaufman also ran separate accounts with an international/developed bent.

The Morningstar analyst assigned to the fund argues that it has a far more independent portfolio than its peers - different regions, different styles, more smid-cap exposure.

About a third of the portfolio is in firms domiciled in developed markets. Those are firms earnings are driven by emerging markets consumers: Colgate-Palmolive, Visa, Novo Nordisk and Facebook kinda stand out. That's a bit about the category norm.

Reported a new strategy is settled to launch at mid-year, though it's possible that the strategy will not initially be aimed at retail investors. I have no idea and Artisan isn't saying.

For what interest that holds,

David

Comments

  • AndyJ
    edited February 2015
    Thanks for the heads-up, David; sounds like Artisan may have finally found their EM guy.
  • MikeW
    Thanks so much David. Very helpful. This was the one fund from Artisan's offerings that was underperforming. Do you know if Mr. Kaufman was hired to lead the existing emerging markets fund or to start a new fund? Have you considered inviting him to participate in a Q and A with the group?
  • David_Snowball
    Hi, Mike.

    The report is that he's building a new team, Artisan's seventh. I haven't seen anything describing how his team's mandate will differ from Team #6's.

    If I can arrange conversations with him, either one-on-one or on a conference call, I'll happily do that.

    More soonest!

    David
  • heezsafe
    edited February 2015
    @David_Snowball Although still opaque (no surprise there), it is becoming more likely that your earlier hunch about changes afoot at Artisan re. EM was spot-on. The picture being painted behind the canvas cover may become more elaborate. Good luck arranging an interview, though; I'd imagine their internally-imposed "quiet period" will keep that from happening until at least this Summer (recall how long it took you to get Bryan Krug to speak about anything, for no apparent reason).

    This move does raise another side question. We now have another quality manager being pealed away from Thornburg. Not to a second hand yet to count them all, but getting close. What's that about?

    Retail shares? Hey, we wish!! If it happens, it probably will be one of those offers with gross expenses of 6.352%, but for you, and for a short period of 12-18 months, a special low low fee of "only" 1.65%.
  • JohnChisum
    Living in a developing country, I can tell everyone that companies like Colgate Palmolive have huge market shares in these countries. The personal care markets are held by two or perhaps three companies in all. Same with certain food categories where companies like Nestle find success.
  • Old_JoeOld_Joe
    Yes, I remember those small stall-stores all over the place, with those names there even fifty years ago.
  • JohnChisum
    Unilever is another such company. Also P&G. Most of the so called local brands are made by the big 3 in personal care.
  • Old_JoeOld_Joe
    Sounds as if not much has changed in that area, at least.
  • mcmarasco
    edited February 2015
    David, etal.,

    How do you think/feel this will affect THDIX. I am an investor in it and i'm now a little (maybe a lot) concerned that the lead mgr is gone!! Not only that, the two other manager just joined the team in Feb. 2015 (according to M*).

    Should I be concerned????

    Thank you for your thoughts,

    Matt
  • Ultimate_Contrarian
    Big RED FLAG! I'm guessing you'll see significant outflows in the coming months.
  • David_Snowball
    The new guys at Thornburg aren't all that terribly new. Here's the corporate bio for each.

    Ben Kirby, CFA, a managing director of Thornburg, has been a portfolio manager of Developing World Fund commencing in 2015. Mr. Kirby joined Thornburg in 2008 as an equity research analyst, was promoted to associate portfolio manager in 2011 and was promoted to portfolio manager in 2013. Mr. Kirby holds an MBA from Duke University and a BA in computer science from Fort Lewis College. Prior to graduate school, Mr. Kirby was a software engineer at Pinnacle Business Systems in Oklahoma City, Oklahoma.

    Charles Wilson, PhD, a managing director of Thornburg, has been a portfolio manager of Developing World Fund commencing in 2015. Mr. Wilson joined Thornburg in 2012 as an assistant portfolio manager and was promoted to portfolio manager in 2014. Mr. Wilson holds a PhD in geophysics from the University of Colorado at Boulder and a BS in geology from the University of Arizona in Tucson. Mr. Wilson previously served as a co-portfolio manager for Marsico Capital Management in Denver.

    I don't know enough about the culture at Thornburg to anticipate the shareholders' reactions.

    David
  • heezsafe
    A strategy .... that will support his "unique investment beliefs." (?)

    http://www.bizjournals.com/milwaukee/blog/2015/02/thornburgs-lewis-kaufman-joins-artisan-partners.html
  • David_Snowball
    THDIX, being quite large, is outside of our normal universe so I haven't followed it closely though certainly I should have done so earlier. Our universe is about 6200 funds, roughly all of the funds too small to be worth Morningstar's attention. That's a veiled plea: if you see something interesting boiling up, let me know and I'll make a good faith attempt to learn more. Sometimes, as with GoodHaven (GOODX), that won't lead to a profile but often it will.

    As a result, I don't know much yet about Mr. Kaufman's UIBs. Our colleagues at Morningstar seem to point toward a couple:
    manager Lewis Kaufman invests in three kinds of stocks--basic value names, consistent earners, and emerging franchises--while most of his peers focus on one type of stock. He also pays more attention to mid- and small-cap opportunities than most of his counterparts do, and he runs a relatively compact portfolio of names.
    That leads to a high active share and a pretty distinctive portfolio profile.

    As the Artisan fund emerges, I'll try to learn more.

    For what that's worth,

    David
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