Keep It Simple Stupid
This month I helped my 9-year-old son Zach complete a series of mathematics problems for a badge. The project provided a very important lesson on explaining complex theory, and allowed me to spend quality time with my boy.
One task was to monitor the value of NZ$100 against 10 currency pairs. Zach chose a few obscure ones like the Thai Baht and South African Rand, but we also went with the familiar US and Australian Dollar. Apart from how many Mexican Pesos he got for his New Zealand dollar, what surprised him was how much the NZD moved around, with it falling against the USD from 75 cents to 72.5 cents over the month. The challenge for me was trying to explain to a 9-year-old why this had happened! Unfortunately, the term “random walk” was too technical to use. So instead, I left it to him to come up with a reason. When I asked him why the NZD fell he looked at me as if this was a trick question, or I’d just swallowed a stupid pill, “like duh Dad, because the US dollar was stronger”. Sometimes the most simple and obvious answer is the best.
The intricacies of reporting season
August was busy for the Australasian investment team with over 50 companies we invest in reporting their results, and at least that many that we are actively looking at. Everyone in the investment team pulled some long hours, read countless annual reports and listened to plentiful conference calls. Overall, I’m happy with the results from our investments and that’s been reflected in another good month for the funds.
The Emerging Fund was the standout up 3.9%.
The small cap reporting season had a better feel to it this time than earlier in the year when anecdotally AU$4-5 billion had just been sucked out of the sector. A more in-depth coverage of reporting season can be found in the Australasian Review section in this newsletter, as well as a company profile on one of our newer holdings, Macquarie Telecom.
There will be no rest for the wider investment team. September will see us heading to various parts of the globe for a bit of one-on-one time with company CEOs, brokers and economists. We will be covering Australia, Canada, Hong Kong, the UK, and Europe. As disclosed previously, we’ve reached capacity on the Growth 2 Fund - this has now soft-closed. The Dividend Fund is our only Australasian Fund open and as at 31 August has remaining capacity of $10.3 million.
A formula for success
Victoria Harris is going to join me as co-portfolio manager on the Global Fund from 1 October, 2017. Victoria will have been with us for around six months by then, and was previously a co-portfolio manager at Milford Asset Management where she worked for six years. Additionally, I will likely transition off the Growth and Growth UK & Europe funds in the next six months. Chris Bainbridge and Chris Wright respectively, who have been with Pie for a number of years, currently manage those funds with me and are well-placed to take over. I am aware that some other industry counterparts are retiring, but I’m not. In fact, I am far from it. At 37 years of age – a spring chicken still to many – there remains an exciting future at Pie and one that I am keen to spearhead. My role as CIO is very important because it gives me oversight of ALL investment decisions. Given my experience and knowledge, I believe this is the best role for me at Pie. Finally, it puts me in a good position to manage our new product. More details soon.
As always, thank you for your support. If you have any questions please don’t hesitate to call me on (09) 486 1701, or email me, mike@piefunds.co.nz.