C WorldWide Asset Management – Copenhagen

C WorldWide Asset Management (previously Carnegie Asset Management) was created in 1986 as part of the Carnegie Group. The firm was spun out of Carnegie Investment Bank in 2009 and the name changed in 2017. C WorldWide is 80% owned by private equity Altor Fund III and 20% by employees. Today it manages <$20 billion in global equities for institutional clients in the Nordic region, the UK, Canada and Australia. Main portfolios are highly concentrated with just 30 stocks held. The investment approach is bottom up stock-picking and they focus on stocks above $10 billion market cap and the average market cap is nearer $100 billion. The focus is on companies generating free cash flow and earnings growth. In addition to the concentrated global equity strategy, the firm has an ethical and long/short version of the same strategy plus a number of more specialised strategies, including Global Healthcare.

Bo Knudsen is Managing Director and Global Portfolio Manager at C WorldWide Asset Management in Copenhagen.  He holds a M.Sc. (Economics and Business Administration) degree from Aarhus School of Business and San Francisco State University.  Bo has worked with portfolio management of global equities since 1989. Prior to joining C WorldWide Asset Management in 1994 he worked for five years as a global portfolio manager with Danske Capital in Copenhagen and ultimately held the position as Head of International Equity Investments. From 1998 Bo joined Nordea Investment Management as Executive Director and Head of Equities. He re-joined C WorldWide Asset Management in 2001 as global portfolio manager.

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Aviva Investors – Edinburgh

Aviva is the largest insurer and a leading life and pensions provider in the UK and Aviva Investors is its asset management business. The Edinburgh office was set up in 2018 with nine senior staff from Aberdeen Standard Investments. Aviva Investors manages around $444 billion. $50 billion in active equities. It has offices in 19 financial centers including Edinburgh, London, Paris, the US (Chicago) and Canada staffed by over 40 equity investment professionals.  Global equity strategies include: Income ($776 million – income and capital growth), Endurance (c.$1 billion – defensive capital growth) and launched in 2019, Unconstrained (opportunistic capital growth). AUM in global equities are currently $2.5 billion and this figure is expected to grow.

Mikhail Zverev joined Aviva Investors in October 2018 as Head of Global Equities. He was formerly Head of Global Equities at Standard Life Investments (SLI) and also portfolio manager on a number of funds. He joined SLI in 2007. After graduating from St Petersburg State Technical University with a BSc Physics, Mikhail started his career in 1998 with Trigon Capital, an Eastern European investment banking firm. He gained his MSc Accounting and Finance from London School of Economics and joined the investment banking division of Schroder Salomon Smith Barney in London in 2001, before moving to First State Investments as an Analyst, UK Equities in 2002.

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Corporate share buybacks

An interesting recent report from Goldman Sachs shows that share buybacks have been the largest source of U.S. equity demand during the last five years.  Apparently, since 2010, net corporate buybacks averaged $420 billion annually, compared to only $10 billion each from households, mutual funds, pension funds and foreign investors.

According to a Bloomberg report, Goldman studied stock performance during earnings blackout periods, when discretionary buybacks are restricted beginning about five weeks before a company releases earnings, and then for two days afterwards. During the past 25 years, return dispersion and volatility during blackout windows have been higher compared with non-blackout periods: 16 percentage points versus 14 percentage points, and 16.4 points versus 15.8 points, respectively.  Meanwhile, since buybacks have bolstered earnings per share by reducing the total stock outstanding, blocking repurchases would hurt growth in EPS. Over the past 15 years, the gap between EPS growth and earnings growth for the median S&P 500 company averaged 260 basis points. According to Goldman Sachs “In a world without buybacks, forward EPS growth could be trimmed by 250 bp,” a reduction that has historically corresponded to a 1 point decline in forward price-earnings multiples.







GAM – London

Ali Miremadi is an investment director, who runs global equity funds and a US-focused fund. Miremadi was one of the principal partners at THS Partners, (acquired by GAM in 2016). He joined THS Partners in 2007. Previously, Miremadi worked at Goldman Sachs. He started his career in 1994 at Baring Securities. Miremadi holds a first-class degree in English Literature from Wadham College, Oxford and is also a CFA charter holder.

GAM is an independent asset manager, providing active investment solutions and products for institutions, financial intermediaries and private investors.  GAM employs over 900 people in 14 countries. Headquartered in Zurich, it is listed on the SIX Swiss Exchange. The Group has assets under management of CHF163.8 bn ($165 bn) as at 30 June 2018. CHF84.4 bn ($88 bn) is managed actively in-house.

What is the geographic split of GAM’s CHF12.5 bn equity assets?

In London, we have teams that invest in UK, European and global equities as well as technology companies. In Zurich, teams invest in Swiss and German equities as well as European, healthcare and luxury stocks, for example. We also invest in Japan from London and Zurich and emerging markets from London, Zurich and Hong Kong.

I manage $650 mn with my colleague Kevin Kruczynski. $400 mn in global equities and $250 mn in the US-focused fund.

How do GAM’s offices collaborate?

Each team has the freedom to make independent investment decisions. However, we leverage the knowledge and expertise of our colleagues across locations. I regularly consult with the European and technology teams in London. Last month, I did some research on Tencent and conferred with a colleague in Hong Kong who had recently met management. I consult with our pharmaceutical specialists in Zurich. Consulting with colleagues can be both casual – ‘water-cooler conversation’ – and formal.  The recent big correction in Facebook resulted in the tech team writing a note saying they believed it would last a couple of quarters rather than being a long term problem, for example.

Which screens do you use?

We have 40 holdings in the global funds. We look for companies that are undervalued.  We have a clear idea of what we’re interested in, so we don’t use screens. Company meetings are a core part of our approach. We do around 350 meetings a year, but we don’t buy and sell that often. Primary research is extremely valuable – I’ve never had a meeting where I didn’t learn something new. For example, I’ve held FedEx for a long time and feel I know it well but Jeffrey Smith (IRO) obviously knows the logistics industry inside out.

What is your investment style?

Value oriented. We look forward three years. We do a bull, base and bear case and a fundamental evolution of the business and then flex it to be better and worse than our expectations. We also flex valuations. We look for a minimum of 30 percent upside. We believe our portfolio is 55 percent undervalued currently versus in three years’ time. Being value oriented doesn’t mean that we just own bank and oil shares though! Equally, it doesn’t mean we won’t own something like Microsoft. We look at Microsoft’s free cash flow yield, so we are prepared to be flexible about valuation.

We start our research by looking at the industry and sector and then do extremely specific individual stock analysis. We are bottom-up, so we look at drivers of profitability, capital allocation, management and strategic decisions and the likely outcome on revenues and earnings. Then we look at valuation. Being overweight or underweight in particular sectors and geographies is a consequence of our stock picking process. Our investment horizon is three years plus.

Do you have a recommended list?

No, every team has freedom to make their own investment decisions. Examples of stocks held by more than one team, however, include: Continental, CRH, UniCredit and Telecom Italia.

What’s your benchmark?

All our funds are pooled and we use the MSCI World or the S&P 500.

Are there any sectors you won’t invest in?

I have never invested in tobacco but that’s not a GAM-wide decision.

Do you incorporate ESG into your investment process?

We have a central responsible investing team and they take an interest in our holdings. We take governance very seriously and do vote our proxy.

What’s your market cap cut off?

We have a very broad remit. We have some holdings below $1 bn but $10 bn tends to be the median market cap. So we own one or two mega caps and one or two very small companies.

What’s your average turnover?

Around four years.

Buy backs or dividends?

It depends on the circumstances. We don’t require a company to pay a dividend. Companies shouldn’t promote a progressive dividend policy unless their business can support it. Companies shouldn’t use cash to buy back shares unless the stock is undervalued. The US is full of companies doing buy backs regardless of a stock’s valuation.

What’s your average position? And your largest position?

An average position is 2-3 percent and the largest position is 5 percent. We could own a 5 percent position in our global funds and 5 percent in our US focused fund.

Discuss some of your larger holdings

Apache: this has been an on-going challenge. We’ve owned it on and off for the best part of a decade. It has gone through a real transformation in the last three years or so. For a long time, it was run by various generations of the Plank family but the last Plank was ejected about two years ago. The current team is now focusing the business on two cash generative parts, the North Sea and Egypt, and using cash flow to develop its onshore US operations. It built up 3,000 acres in Alpine High. We think it will be a fantastic 20-year oil and gas producing province. The market has not given Apache any credit for this because most of the wells they drill tend to be gassy liquids and at this point all people want out of the US is oil.

Firstly, it is operating within cash flow, which we approve of. Secondly it is not just gas but oil we expect them to get out. So we think the market is being typically very short term in thinking they do not have enough oil-rich wells and they are using all their cash flow to develop this field. We think this could be a fantastic long-term asset. Probably in the second half of 2019, once they produce more of these non-gas liquids – about two thirds of production – and once the market accepts that and starts to value that, the potential for returns is very attractive.

Rolls-Royce: we are currently doing well in it. Warren East, CEO, has taken a very complicated business and simplified it operationally and financially. Rolls-Royce has been a very sprawling operation and has not been very well run. It now has three divisions instead of five and has removed middle management. The financial controls, not solely its accounting, were substandard previously, but it has now adopted a free cash flow target of £1 bn by 2020. East has beefed up financial accounting in each geography and division. Now sales of new engines need to be cash flow positive and the firm can no longer subsidize engine sales with aftermarket sales. We are very supportive of his strategy. Being in the business of selling engines for civil aerospace is a long-term growth story. The company is fundamentally very strong from an engineering perspective, but East is now turning it into a company that is run as a commercial operation. The shares have recovered well from their lows, but we believe they have further to go if East can demonstrate that he can deliver.

Many investors aren’t prepared to invest in companies with problems, but we think there is a clear road map to fixing Rolls-Royce.

CRH: we know the industry well. We sold Heidelberg and bought CRH a year or so ago. CRH are very good allocators of capital – they buy things cheaply and sell divisions when they become more highly valued than they ought to be. They have a very strong corporate culture. Effectively it is a US and European business, but management is based in Ireland. CRH shares are currently on a very low multiple. No credit is given for their ability to create value through M&A but the firm has 20 years of hard evidence of doing exactly that. If you look at Heidelberg, LafargeHolcim and Cemex, they all did large, value-destroying debt finance deals before the financial crisis. CRH didn’t. Their US business is doing well. Europe has just had its third year of good growth. In France, we are still a long way from them getting operating leverage, but as more and more capacity gets used up we think they’ll get there. So there has been very good earnings growth at CRH and the balance sheet is strong. We are very much in favor of buy backs when the shares are very cheap, and they had the available financing. CRH is a high quality operation, which should do well over the next three to five years.

Do you have to meet management before you buy a stock?

Meeting management is immensely important to us. It is rare that we buy something without meeting management, seeing them at a conference or without a call. In 90 percent of cases, we’ll have met management before deciding to buy.

How do you prefer to meet management?

One-on-ones are the most valuable as we get more time with management. We’ll also attend group meetings and conferences. We tend to do a lot of one-on-ones as we are stable, supportive shareholders.

Best companies at IR?

FedEx is very good at IR, as is CRH.

Why should corporates target GAM?

We are stable, supportive shareholders. Our structure means companies may meet more than one team. Also, we don’t focus on the next quarter or even the next 12 months – our questions are more strategic. Generally, companies like speaking to us.

A version of this interview appeared in IR Magazine’s 30th Anniversary Issue


The information in this document is given for information purposes only and does not qualify as investment advice. Opinions and assessments contained in this document may change and reflect the point of view of GAM in the current economic environment. No liability shall be accepted for the accuracy and completeness of the information. Past performance is no indicator for current or future development. The mentioned financial instruments are provided for illustrative purposes only and shall not be considered as a direct offering, investment recommendation or investment advice. Allocations and holdings are subject to change.


Hosking Partners – London

James SeddonJames Seddon is one of the Founding Partners of Hosking Partners. He previously worked with Jeremy Hosking at Marathon Asset Management from 2006 to 2012. Prior to that, James spent 19 years at Rowe Price-Fleming and T. Rowe Price International where he was a Senior Portfolio Manager of European equities for the European and International Equity strategies. James began his career at Schroder Capital Management and holds a degree in Physics from Oxford University.

Hosking Partners is an investment management partnership that started in 2013. The firm has around $9 billion of assets under management through one global equity strategy. The investment team of five seeks long-term investments using a fundamental contrarian methodology. Their differentiated approach has a long-term investment horizon through a diversified portfolio of stocks with a high active share. The investment philosophy incorporates a capital cycle analytical framework: the tendency of industries with high returns to attract new capital and more competition, which over long periods of time drives down industry returns until capital withdraws, returns recover and the cycle begins again. This is combined with a behavioural approach that uses mental models to assess companies and industries. The strategy aims for alpha generation over the long term.

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Kempen Capital Management – Amsterdam

Mark Oud

Amsterdam, Netherlands-based Kempen Capital Management was established in 1991 and today manages €59.8 bn ($73 bn), of which €16.3 bn is in investment strategies and €43.5 bn in investment solutions. The firm has offices in Amsterdam, London, Edinburgh and Paris. The investment strategy is stable outperformance over the long term with ESG fully integrated into the investment process. Kempen’s investment strategies division has a number of equity strategies: small caps, high dividend, sustainable value creation and sustainable equity.

Mark Oud joined Kempen in 2017 as a senior portfolio manager for sustainable value creation. Before this he was a senior portfolio manager at Delta Lloyd Asset Management and head of Delta Lloyd’s Cyrte Investment. He previously worked at Main Capital Partners and Deutsche Bank.

Richard Klijnstra

Since August 2016, Richard Klijnstra has been head of sustainable value creation, having previously been head of Kempen’s credit team from 2006 to 2016. Prior to this, he worked at Fortis Investments in Paris and the Netherlands, and at Nationale-Nederlanden. Here he discusses Kempen’s approach to sustainable growth.

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Impact of MiFID II after 11 weeks

Many market participants expected MiFID II to start slowly as the regulations rolled out over the course of this year.  Many companies also have been talking about ‘business-as-usual’ with many in ‘wait-and-see’ mode.  Now that a quarter has passed, what is the reality?  Particularly from the buy-side’s perspective.

To help answer this question, we interviewed a sample of 50 European-based portfolio managers during the 11th week after MiFID II (March 19-23, 2018).  Their answers painted a picture suggesting more revolution than evolution.  The buy-side is clearly experiencing significant change already and it’s clearly not ‘business-as-usual’.

The results show:
  • Access has been negatively affected
  • Investors have already reduced the number of brokers they are dealing with for both equity research and Corporate Access
  • Cutbacks in research providers is already leading to restricted access to conferences and non-deal roadshows
  • Price discovery for research is evolving quickly
  • The risks of companies and investors ‘missing’ each other during roadshows has increased
  • Interesting (and worrying) divergence appearing between the communication lines issuers-to-shareholders and issuers-to-non shareholders
  • Buy-side is contacting more companies directly and would like company IR teams to also do more themselves
  • Investors are strongly in favor of an independent model for providing Corporate Access
  • Bureaucracy has increased with all interactions being logged
  • Surprisingly, some buy-siders are reporting poor responsiveness from some IR teams
The changes started pretty immediately in January with many buy-siders issuing “cease and desist” style emails to the sell-side asking them to stop sending research unless they have a contract in place.  For example, typical emails were as follows:

Our research sample was as follows:

Has the number of meetings changed?

What do investors want?

James Hambro & Partners LLP – London

The Hambro name has been closely associated with the investment world for more than 200 years. Founded in 2010, James Hambro & Partners LLP (JH&P) is an Independent Private Asset Management Partnership with assets under management, advice and administration of £2.8 billion (US$3.8 billion). The partnership offers institutional-quality investment management to HNW families, trusts, individuals, charities and associated portfolios.

William Francklin joined JH&P in July 2017 and has over 30 years’ experience managing portfolios. He began his career in investment management in 1981, working at Morgan Grenfell Asset Management (in both London and New York) and latterly at Waverton Investment Management. William has also managed assets for American clients for a number of years. As JH&P has SEC authorisation (as of July 2017) he will continue to manage global portfolios for US clients based in the US and overseas.

Is there a connection between JO Hambro Capital Management and James Hambro & Partners?

The two businesses are completely separate economic entities, managing different pools of money for different clients. So no commercial connection. However, the founder of JH&P is Jamie Hambro who was previously the Chairman of JO Hambro Capital Management (JHCM) which was acquired by Australia’s BT Investment Management in 2011. Jamie remains on JOHCM’s board and some of JOHCM’s partners are investors in JH&P.

Current AUM are £2.8 billion ($3.8 billion) – do you have a final figure in mind?

Short term we would like to get AUM to £3 billion ($4 billion), medium term – £5 billion ($6.8 billion).

Of AUM what’s equity portion and geographic split?

70% equities. At this stage as we are predominantly a UK private client business, the split is 30% UK equities and 40% overseas equities. The remaining 30% of AUM is in fixed income, alternatives.

I understand you have SEC approval – discuss.

Historically, I started looking at offshore trusts for US clients who could not have a US money manager. These trusts are completely transparent from an IRS point of view. We also ran specialist portfolios for US family offices who invest outside of the US – for example – a specialist European portfolio. I also work for US clients based in London.

How is the investment team structured?

We have areas of responsibility. We have people looking at the UK, Europe (Mark Leach), Asia and Japan (Camilla Cecil, who until recently worked at Ruffer in Hong Kong) and the US (myself and Charlie Underwood). However, we very much have a “buy-in” approach so each idea goes to the stock selection meeting and has to get approval from that meeting to go on the recommended list.

So you work from a recommended list?

We very much have a recommended list and are very collegiate in what we do. For example, often at least eight of us will meet a company. We produce very detailed work on companies.

How would you describe James Hambro’s investment philosophy?

We look for high quality companies where we know the management well. Quality is very important. We like leading companies in their respective fields.

Which screens do you use?

We are not screen driven but do look at screening measures to check our research. But we are not HOLT driven for example. We just like to check that our investment thesis stands up.

Any sectors you won’t invest in? (e.g. tobacco, defense etc)

No sectors are excluded but some clients prefer not to invest in certain sectors.

Market cap cut off?

We typically invest in large cap and mid cap stocks. Occasionally we will invest in a small company if we have a very detailed knowledge of the company and know management really well.

Average turnover?

Our figure for turnover historically has been close to 25%. We are, however, very much looking to invest in companies for the long term.


For the UK clients we use Asset Risk Management (ARC) and for international clients we use the MSCI World Index.

Performance vs. benchmarks? Our global equity portfolios usually compares our performance with the MSCI World Index. In practice, our clients look at our returns both on a relative and absolute basis.

Active share ratio?

This is not a figure we monitor.

Any themes you favor?

Leading growth companies – for example Visa. Historically attractive total return stocks with income, such as Diageo, which we have owned for a long time. In Asia, a growth story like AIA, a life insurance company that came out of AIG and is a leading life company in Asia.

I believe you are bottom up? Discuss.

We are bottom up stock pickers but have a very detailed asset allocation process. You cannot totally divorce stock selection and asset allocation. However, top down macro investors are currently very bullish on emerging markets but we do not have much direct emerging markets’ exposure. We are always wary of places where we can have big currency risk. Emerging markets may do well this year, are very much in vogue and are deemed to be cheap.

Can you discuss some of your larger holdings?

Visa – we have owned it for a long time here at JH&P (and I owned the stock for a number of years prior to joining). It is the leading company in debit and credit worldwide. There are very high barriers to entry in the sector. Its secular growth is driven by the shift to electronic payment and away from cash. It is an incredibly high margin business. It has the highest margin of any company in the S&P 500. It has a consistently high growth rate. It has 59% market share of card volume in the US vs. Mastercard which has 26% and American Express which has 14%.

Diageo – originally was the merger of Guinness and a distillers business (Grand Metropolitan) in a hostile take-over (1997). That take-over turned out to be very good for shareholders. The reason it turned out to be so good for shareholders is that it happened before people recognized the power of global brands. In Diageo’s case they have some very powerful brands including Johnnie Walker, Gordon’s gin and Smirnoff, amongst many others. It is a long term holding. It generates free cash flow and has a rising dividend yield.

AIA – is a more recent holding. It gives our clients exposure to the fast growing life insurance business in Asia including China.

Samsonite – world leader in travel luggage with over four times the market share of the next largest player. Beneficiary of growth in the global tourism industry and seeing fast growth from Asia.

Any recent sales and why?

WPP is an example of a share we sold in July 2017 as we were increasingly concerned about the possibility of a profits warning. We continue to believe that advertising agencies will be under pressure from the shift to digital which favours Facebook and Google in particular.

Buy backs or dividends?

Probably dividends but it is hard to be too dogmatic. US companies have historically preferred buy backs. UK companies tend to prefer dividends.

Does a stock have to have a yield?

A stock does not have to have a yield but for some clients yield is very attractive. 10 year government bond yields are very low and yields on two year government bonds are negative.

Do you have a strict price target when you buy a stock?

We do not have a strict price target but if shares get very expensive yet the fundamentals remain good – we will top slice the position from time to time. If fundamentals change, we will sell.

Average position?

Typically 3% for a blue chip holding and 2% for a mid cap.

Is Corporate Governance important?

We do follow corporate governance and might be involved if we deemed it necessary.

Do you have to meet management before you buy a stock?

We rarely invest in a company where we have not met the management. Ideally we like to meet management one-on-one but group meetings are fine too. We also attend conferences. We will definitely attend the next Nasdaq conference in London. We aim to meet the management of companies we invest in including the CEO or CFO at least once a year.

How will MiFID II affect you?

MiFID II rules means we have set aside a budget so we can afford to pay for research every year whether markets go up, down or sideways. We also try to speak with companies directly to arrange meetings and we use independent providers such as Phoenix-IR.

Best companies at IR?

Lockheed Martin is a company that springs to mind. The company visits investors in London on a regular basis which is very reassuring for long term investors. The IROs are also incredibly well informed.

Why should corporates target James Hambro?

Our clients are people who genuinely want to invest in long term successful businesses. Our clients do not like high turnover – so we invest for the long term.

A version of this article appeared in IR Magazine


Larry Fink (BlackRock) – letter to CEOs

Larry Fink, the founder and CEO of BlackRock has written his annual letter to the CEOs of the companies in which the world’s biggest institution owns shares.  In it he urges CEOs to consider the societal implications of their business decisions and to focus on their long-term plans.  “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.”

He highlights BlackRock’s responsibility to engage with companies because index investors have become the ultimate long-term investors and he reaffirms his belief that companies are overly focused on the short term.

He calls for companies to articulate their strategy for long-term growth and explain their strategic framework for long-term value creation. “This is a particularly critical moment for companies to explain their long-term plans to investors.”

The letter, available below in full, is well worth reading…



Royal London Asset Management – London

Mike Fox of Royal London Asset Managers.

Royal London Asset Management (RLAM) was established in 1988 and is a wholly-owned subsidiary of the Royal London Group (founded 1861). The Group consists of the Royal London Mutual Insurance Society Limited (RLMIS) and its subsidiaries, and is the UK’s largest mutual life, pensions and investment company.

RLAM also manages assets to external clients, notably corporate pension schemes, local authorities, insurance companies, charities, endowments, universities, wealth managers etc. It has AUM of £106 billion/$140 billion (June 30 2017).

Mike Fox is Head of Equities and Senior Fund Manager of the Sustainable World Trust and Sustainable Leaders Trust, the latter role he has fulfilled since November 2003. During this time he has been awarded Citywire Top 100 UK Growth Fund Manager of the year (2007) and has a 4* Morningstar rating.

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