Aviva Investors – France

Matthieu Rolin joined Aviva Investors France in 2015 and covers US equities.  He was previously a senior portfolio manager at SwissLife Banque Privée (2010 – 2015) and a senior fund manager at Olympia Capital (2004 – 2010).  He has a Masters in Banking and Finance from Université Lumière (Lyon II) and SKEMA Bachelor.

Aviva is one of the world’s largest insurance groups with global assets of >$630 billion.  It is also France’s third largest multi-line insurer and has ~$50 billion under management.

How is Aviva Investors France positioned in the French investment management industry?
“We are a top 10 asset manager in France in terms of AUM.  We invest in all asset classes – equities, fixed income, real estate, multi asset and some alternative investments.  There are 35 in the investment team – portfolio managers and analysts and we also share resources with other Aviva offices around the world.  For example, there are nine analysts in the US, eight in London, two in Singapore and one in Toronto plus the four analysts we have in Paris.”

Do Aviva Investors in Paris and London confer?
“Absolutely, we share ideas, we share resources, we share the way we work.  We talk every week.  Personally, I go to London at least once a month to meet my colleagues and exchange ideas.  Also, all equity teams in Paris are on the same floor so I share ideas with the European and Asian/Japanese guys too.”

Does Aviva Investors have a common investment style?
“Aviva Investors Paris and London share the same investment philosophy. We are stockpikers. We act as long term shareholders, not as traders. We are a global asset manager.”

Aviva Investors in France has ~$12 billion in equities – what’s the US equity figure?
“$1 billion in US equities.  Paris invests in US equities, Eurozone equities and Asian equities.  .”

Which screens do you use?
“We don’t have a quant approach.  We have an ideas generation process.  We try to identify superior business models.  We also follow long term themes that will deliver superior investment returns over time.  We also like to find out of favour stocks or stocks that are not on the radar of the market  as we like to discover hidden value.  Sometimes we do very basic screening but we are very fundamental investors so we prefer to concentrate on business models and valuation.”

Do you have a target price when you buy a stock?
“Yes that’s part of our investment process.  We focus on the business models, what are the long term drivers of the company, barriers to entry, sector dynamics – we try to understand in depth what a company is doing and what it will look like in a few years’ time.  Then we look at the valuation and do the financial analysis.  So depending on the sector and the business, we use different metrics but all the time we have a target price for each investment realized.”

Market cap cut off?
“Generally >$5 billion for liquidity reasons.  Currently my smallest company has a market cap of $7 billion.  The median market cap is $60 billion – so a large cap focus mainly.”

What’s an average position?
“2% ($20m) – I try to run a fairly concentrated portfolio with ~60 -80 stocks.”

What’s largest position?
“4% ($40m) if I have high conviction.”

Average turnover?
“Pretty low as we are long term investors.  30 – 40%.  We try and keep stocks for 2 – 3 years.  I might trade around a position and benefit from short term volatility to try and add a few basis points of alpha but such activity is very limited.”

Which benchmark do you use?
“For Aviva Amérique it is the S&P 500.”

Active share ratio?
“As of November 30th 2016, the active share ratio for Aviva Amérique was 26.5%.”

Any sectors/themes you do/don’t favour?
“A theme I currently favour is the steepening of the yield curve and the increase in both short and long term rates in the US.  So I like companies which will benefit from short term rates due to large amounts of deposits.  I also favour life insurance companies as they will also benefit.
On the other hand, I have limited exposure to consumer staples’ companies as they have benefited a lot from the fact that rates were very low and investors were hiding in staples’ companies because of low volatility of earnings and high dividends.  That trend is now reversing as we’ve seen an increase in the 10 year interest rate in the US.  So a lot of money flew out staples’ and into financial stocks.
Another theme that is very long term is mobility, cloud and the technology revolution that is going on.  Salesforce is a holding because it is a clear leader in cloud computing and solutions in cloud and is a leader in CRM.  I really like that type of business.
E-commerce is another theme I like and Amazon has developed two businesses.  The market place – where it is a global leader and has developed a super infrastructure that has created extremely strong barriers to entry.  The other business is a surprise business – as it was not part of the original business model for Amazon – Amazon Web Services (AWS).  It is #1 in public cloud globally and it has a tremendous growth rate.”

Can you discuss some of your largest holdings?
“Amazon is a large holding.  So is Microsoft – because it’s a clear leader in cloud and I like the transition it has made under the new CEO.  Before it was just a software company and it was stuck with the decline of PC sales but the new CEO has managed to turn the company into one of the leading players in cloud.
Another large position is Bank of America.  As mentioned, I favour financials because of what is going on with interest rates.  Bank of America is making strong efforts to cut costs and improve their cost income ratio.”

Is Corporate Governance important?
“Yes it is part of what we look at.  ESG criteria is part of our investment process.”

Do you have to meet management before you buy a stock?
“I try to meet or talk to management before buying a stock but this can sometimes be difficult in Paris.  I travel to the US a few times a year, meet companies in my office and attend conferences such as the Nasdaq conference in London.  I meet ~100 companies a year.”

How do you prefer to meet management?
“One-on-ones are always the best as you can ask all the questions and have a more direct relationship with the company.”

Best companies at IR?
“Home Depot – they come to Paris and I had an excellent meeting with the CEO.”

Why should US corporates target Aviva investors in Paris?
“We are long term investors, not a hedge fund, not short term.  We want to understand management, the strategy and go in-depth.   We take our time to get to know a company but when we invest we are faithful investors and want to hold a stock for the long term.”

A version of this article also appeared in the Spring 2017 edition of IR Magazine.

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