EM Portfolio: First Investment Committee Meeting

HOSTS Alec Renehan & Bryce Leske|24 August, 2020

Meet your hosts

  • Alec Renehan

    Alec developed an interest in investing after realising he was spending all that he was earning. Investing became his form of 'forced saving'. While his first investment, Slater and Gordon (SGH), was a resounding failure, he learnt a lot from that experience. He hopes to share those lessons amongst others through the podcast and help people realise that if he can make money investing, anyone can.
  • Bryce Leske

    Bryce has had an interest in the stock market since his parents encouraged him to save 50c a fortnight from the age of 5. Once he had saved $500 he bought his first stock - BKI - a Listed Investment Company (LIC), and since then hasn't stopped. He hopes that Equity Mates can help make investing understandable and accessible. He loves the Essendon Football Club, and lives in Sydney.

It’s time for the first investment committee meeting for the Equity Mates Hypothetical Portfolio. As we continue this learning experience of building out a hypothetical portfolio, we hear the first stock pitch.

To kick it off we discuss a stock that has performed particularly well over the past few years – Magellan Financial Group (ASX: MFG).

For more information on the Equity Mates Hypothetical Portfolio – head to our Portfolio webpage here.


*******

If you want to let Alec or Bryce know what you think of an episode, contact them here

*****

Some of our favourite resources and offers to help you during your journey:

*****

Make sure you don’t miss anything Equity Mates related by signing up to our email list. And visit this page if you love everything Equity Mates and want to support our work.

*****

Equity Mates Investing Podcast is a product of Equity Mates Media. 

All information in this podcast is for education and entertainment purposes only. Equity Mates gives listeners access to information and educational content provided by a range of financial services professionals. It is not intended as a substitute for professional finance, legal or tax advice. 

The hosts of Equity Mates Investing Podcast are not financial professionals and are not aware of your personal financial circumstances. Equity Mates Media does not operate under an Australian financial services licence and relies on the exemption available under the Corporations Act 2001 (Cth) in respect of any information or advice given.

Before making any financial decisions you should read the Product Disclosure Statement and, if necessary, consult a licensed financial professional. 

Do not take financial advice from a podcast. 

For more information head to the disclaimer page on the Equity Mates website where you can find ASIC resources and find a registered financial professional near you. 

In the spirit of reconciliation, Equity Mates Media and the hosts of Equity Mates Investing Podcast acknowledge the Traditional Custodians of country throughout Australia and their connections to land, sea and community. We pay our respects to their elders past and present and expend that respect to all Aboriginal and Torres Strait Islander people today. 

*****

Have you just started your investing journey? Head over to Get Started Investing – Equity Mates 12-part series with all the fundamentals you need to feel confident to start your investing journey.

Want more Equity Mates? Subscribe to our social media channels (@equitymates), Thought Starters * Get Started Investing mailing list and more, or check out our Youtube channel.

Equity Mates Investing Podcast is part of the Acast Creator Network.

Bryce: [00:01:28] Welcome to another episode of Equity Mates, a podcast where we help you learn to invest in 45 minutes or less. We break down the world of investing from beginning to dividend so that you can hopefully make some returns. My name is Bryce and as always, I'm joined by my equity buddy Ren. How's it going, bro? [00:01:43][14.8]

Alec: [00:01:43] I'm very good. Bryce very excited for our first investment committee meeting of the Equity Mates People's Fund, a.k.a. the Hypothetical Portfolio Fund, a.k.a. Bryce's Retail Fund. [00:01:58][15.0]

Bryce: [00:01:59] Yes, not true. There's not going to be many retail stocks in that, I think. [00:02:02][3.6]

Alec: [00:02:03] But I've just noticed in your intro as well. For a while that you tried to do the we help you learn to invest in 20 minutes or less. You just keep going back to forty five here. I think, like, a little more your info is kind of it's white noise for the moment. [00:02:21][18.4]

Bryce: [00:02:23] Wake up Jeff. Yes. So here we are. First Investment Committee meeting is officially open and today's episode, Ren is going to be bringing an idea to the table. He's a bit disappointed that I'm not bringing an idea to the table. [00:02:37][13.7]

Alec: [00:02:37] Miscommunication. I thought we were both bringing an idea to the table for discussion. Bryce has completely hung me out to dry. Not terrible stock for the first investment committee meeting. [00:02:49][11.6]

Speaker 4: [00:02:50] So I am really just kind [00:02:51][1.4]

Alec: [00:02:51] to go out on a limb. I don't know. [00:02:52][1.1]

Bryce: [00:02:53] I'm here to support you and looking forward to hearing what you're going to bring to the table. [00:02:56][3.2]

Alec: [00:02:56] We're given some of my the past performance of some of my stocks of the year. You could be in for a world of hurt with [00:03:02][6.3]

Alec: [00:03:02] this big I feel like stocks of the year. [00:03:04][1.5]

Bryce: [00:03:04] You go for it with something a bit different. But I know you've put a lot of thought into this. I'm throwing you under the bus here. But anyway, so what are we going to do in today's episode? Quickly do a brief reminder of the rules for our portfolio. We will. Officially, today marks the day we're recording on the 21st of August. Today is the official liquidation of our existing portfolio. And then we're going to go into the satellite and have a listen to what Ren is going to be bringing to the table and then talk about our expert watch list. So before we do some housekeeping Ren, you've been busy coding. [00:03:40][35.3]

Alec: [00:03:40] Yes, yeah. Yeah. [00:03:41][0.9]

Bryce: [00:03:42] We've got the portfolio page up on our website. [00:03:45][2.6]

Alec: [00:03:45] We do. We do. Equity Mates dot com portfolio. [00:03:48][2.8]

Bryce: [00:03:49] Yeah. You spent hours doing some coding. That's Equity Mates dot com slash portfolio. This is the page we're going to be housing everything to do with these episodes. You'll be able to see the portfolios as well as the expert watch list. [00:04:03][14.3]

Alec: [00:04:04] That might become a separate page on how we figure it all out. But yeah, if you go to Equity Mates dot com slash portfolio, [00:04:10][6.8]

Alec: [00:04:11] that will be the starting point for your journey into our Equity Mates people's funds. [00:04:15][4.1]

Bryce: [00:04:16] Yes. Also, if you are not already part of the thought is email that we send out every Monday. Make sure you go and sign up to that at Equity Mates dot com. For starters, five interesting articles that primarily have interested Ren during the week. [00:04:32][16.5]

Alec: [00:04:33] Yeah, they have. Yeah. [00:04:34][0.6]

Bryce: [00:04:34] Because he is the one who takes charge of that and does an awesome job. So please go and subscribe to that. It'll get you through that week. [00:04:43][8.8]

Alec: [00:04:43] No better way to start your day. [00:04:45][1.6]

Bryce: [00:04:45] That's right. So Ren quick reminder of the rules. Happy obviously being the first investment committee meeting, happy for anyone involved to change it. So far it's just you and me in the room. We've got three key principles for the portfolio will actually more than three, but a thousand per month is what we're going to be having available to invest. Although we are starting off with the liquidation of this portfolio, [00:05:09][24.0]

Alec: [00:05:10] we've got three rules. First rule, big caveat on the first rule, and it's actually more than three rules. Yeah. So maybe we'll let's put it let's make [00:05:19][8.9]

Alec: [00:05:19] it clear for everyone. We've got the existing portfolio that we're going to be liquidating today. Thirty six thousand thirty six thousand. We'll put up the old portfolio we had on the portfolio page as well. Bryce wants to keep tracking it because he picked Afterpay when it was very early. [00:05:36][16.1]

Alec: [00:05:36] And he was going to say, well, I can see what happens. [00:05:39][2.7]

Alec: [00:05:40] I'm telling him he needs to find the next Afterpay and he's refusing to pitch. So the starting point is the thirty six K that we're liquidating. But moving forward, we want to try and get in a cadence that reflects how we invest and how most everyday retail investors invest, which is you get money from your job, you save a bit of it and you invest. So moving forward it'll be a thousand a month. But we've got a starting point. [00:06:07][27.4]

Bryce: [00:06:07] Yes, this satellite portfolio is all about us steering clear of the ETF side of things. That's all in our core portfolio. So we're looking to be chatting about individual stocks here. We've got a decades long time horizon, so we are not looking to get 10 and 20 baggers in the next two days. That's very important, although that would be it would be nice. Unconstrained and what we mean by that is no limit on markets, as long as you can buy it through some sort of brokerage platform here in Australia, no fixed philosophy. And most importantly, every stock must have a written thesis, 50 words, 5000 words. Doesn't matter. It just must be written down. We also has that on the website. That's it. [00:06:49][41.9]

Alec: [00:06:50] No. One more. [00:06:50][0.4]

Bryce: [00:06:51] Sorry. Yes. Mutual agreement between the investing committee. And if we can't agree, we go to the people. Yeah, nice. [00:06:56][5.5]

Alec: [00:06:57] All right. Now, this isn't a rule, but I feel like this is the right point to add something. I think on the portfolio page and in these discussions, I want to kind of reflect what Chris Welden from Magellan spoke about, the investing process. Yeah, this whole podcast is about learning from the experts, taking all of their insights, stealing their insights for ourselves. And so the way Chris explained the Magellan process is they have been investing universe stocks that have passed the first steps of their assessment and screening process, and then they build their portfolios out of that pull of an investing universe. And it's basically a watch list. I guess it's probably a very big and very structured watch list. But I want to also introduce a watch list of stocks that we're interested in, we think could be interesting, potentially a little bit too expensive or, you know, it may not be the right time to invest because there's some covid uncertainty or other uncertainty. But I think for people who want to say beyond just the stocks that are in the portfolio, we'll include a watch list, Investing Universe section on the website as well, not on that portfolio. [00:08:08][71.4]

Bryce: [00:08:08] I really like that idea. OK, Ren. Well, officially yet we've liquidated 36000. We've got 18 grand to spend on this satellite portfolio in cash. [00:08:18][9.6]

Alec: [00:08:18] So again, for people who have just picked up this episode for the first time, welcome. The reason that we're doing it this way is we've got two portfolios. And again, this is borrowing from the experts. A number of the experts that we've spoken to have talked about having a core and a satellite approach. And the core is that buy and hold set and forget long term dollar cost averaging. Yeah. Broad market or broad asset class investments that you just hold for 40 or 50 years. They compound away and then you sell when you retire. And so in previous episodes of the hypothetical portfolio that you can find in this Faid, we've sort of explained how we're going to run that. Or you can head to the website, Equity Mates dot com slash portfolio and you can see what we've bought for the core portfolio. So that's half of our money. So that's 18 grand there. And then the other 18 grand is what we're starting within the satellite portfolio where it's a little bit more trying to beat the market, trying to pick individual stocks, trying to apply more of the lessons that we've learnt and potentially a little bit more interesting for some people out there. There's only so much you can talk about the ASX 200 ETF. [00:09:29][70.6]

Bryce: [00:09:30] Yes. Yeah, nice. Well, let's actually get into the nuts and bolts of it Ren. So we've developed a very simple sort of template that we're going to be using for these pitch processes, which will house online as well if people want to use it. We are very open to and we want you guys out there to pitch stocks as well. We're very excited that ideally in the next episode, we're actually going to have some of our listeners on pitching some stocks for the portfolio. So keep your eyes open for that one by Ren. [00:09:57][27.2]

Alec: [00:09:58] I think the listeners pitching the stocks is just going to be Bryce with a different voice because it's a little bit nervous to back his convictions. [00:10:04][5.8]

Alec: [00:10:04] Oh, no, no, it's OK. [00:10:07][2.5]

Bryce: [00:10:07] Ren. Well, before we kick into it, do you have anything you want to add? [00:10:10][2.5]

Alec: [00:10:10] Yeah, I do. So speaking personally, when we started this podcast, when I started my investing journey portfolio construction and picking stocks, I always thought you had to pick the unknown company that no one else has heard about. That kind of for me was that's how you made money. You don't you don't invest in the big end of town. What we've seen since we started this podcast and what we've learnt from speaking to experts is even the big end of town can run. Yeah. And if anyone's watching the US tech stocks, the fang stocks, they run a lot. And so something that has been a big learning for me and I think will be important when we're building this portfolio is you can do whatever the hell you want. But I'm not just going to be pitching unknown micro-cap stocks that I'm hoping will tea bag or potentially, you know, go bust like that. That's not the philosophy that we're undertaking, although there may be some. And just to give you an idea of how professional fund managers, some of the best fund managers in Australia make their money with big and Noan stocks, the NFF, which was the Magellan flagship fund run by Chris McKay, now is no longer part of Magellan separate business. Now, they released the annual results recently, and in their letter to shareholders, they listed all their holdings and it really struck me just how well known all of the stocks in their portfolio. So I just wanted to read them out to give you an idea of one of the top 10 fund managers in Australia who does very well for himself and very well for his investors, invests in just the site. So as of the 31st of July 20, 20, M.F. ASX listed Iliza listed investment company. Their holdings were in order of size in the portfolio. Cash, 44 percent. [00:12:04][114.3]

Alec: [00:12:05] Wow. [00:12:05][0.0]

Alec: [00:12:06] And so my first [00:12:07][0.6]

Alec: [00:12:07] pitch is cash. No deal. [00:12:09][2.1]

Alec: [00:12:10] So you had cash. Biggest holdings, second biggest holding Veza, eighteen point five percent of the portfolio. Third biggest holding MasterCard, 16 percent of the portfolio. So over a third of the portfolio is with the payment duopoly of payments, global payments processors. So neither of those stocks are unknown. [00:12:26][16.6]

Bryce: [00:12:27] And Chris Welden loves MasterCard and Visa as well as Visa particularly. [00:12:30][2.8]

Alec: [00:12:31] Yeah, yeah, yeah. It's almost as if Chris McLaughlan Hamish Douglass [00:12:34][3.3]

Alec: [00:12:34] talks about [00:12:35][0.5]

Alec: [00:12:36] the next biggest one, Home Depot, which for people unfamiliar, is basically the Bunnings of America, just a big giant home improvement [00:12:43][7.6]

Alec: [00:12:44] company. Yeah, just like a Bunnings. Just about. Yeah. Should have stopped there. [00:12:49][4.2]

Alec: [00:12:50] So Home Depot, almost 10 percent of the portfolio and then it drops down next month. CBS Health, which is a big pharmacy chain over there, 2.5 percent of the portfolio, Microsoft, two percent of the portfolio, Berkshire Hathaway, two percent of the portfolio, JP Morgan, one percent Berkshire CLOs. So they've got both Class B and class in the portfolio. Same company, Lloyds Banking, a big bank, U.S. Bancorp, Loews and Schroder's. Some of those other names may not be as familiar, but they're still big market cap companies in the UK, in the US. So that struck me because none of those companies are really unheard of. They're all very well known. And like the majority of the performance in the portfolio is going to come from some extremely well known stocks and cash. Yeah. So, yeah, that for me, I think sets the scene for the portfolio. [00:13:40][49.6]

Bryce: [00:13:40] I agree. I think we're not going to be running a small cap fund. [00:13:43][3.0]

Alec: [00:13:44] Yeah, no, no. Yeah. We have an interview coming up with Owen Draskovic, who's making a name for himself, picking the very small end of town. Yes. And don't you worry, we'll be stealing his best ideas. [00:13:55][11.1]

Alec: [00:13:56] Don't you worry about that. [00:13:57][0.9]

Alec: [00:13:57] But we won't just be focussing on that end of the market. So I guess that's a long way of saying if people out there have a thesis on a big company, you know, someone like Bryce wants to say that Afterpay is going to double again or that zero has heaps of growth left or, you know, maybe the [00:14:14][16.7]

Alec: [00:14:14] Commonwealth Bank like us. [00:14:16][1.7]

Alec: [00:14:17] Yeah, actually, you know you know, one that I'm particularly interested in personally and I'm going to put on our watch list is CSL. OK, second biggest company in Australia was the biggest for a little while. Probably will be again, it's just got this unbelievable growth pipeline. The only criticism people have of CSL is its valuation. Arguably, its valuation isn't that extreme, given the growth that everyone seems to agree is going to come. So, yeah, I have no problem with people pitching big stocks if they have a strong thesis and if they think it's going to grow. Absolutely. And so let's add CSL as the first company on the watch list, [00:14:51][33.8]

Bryce: [00:14:51] Don, I've just taken note of that [00:14:52][1.3]

Alec: [00:16:46] Well, I want to touch on what you've just spoken about in terms of how we're going to treat some of the big stocks over in the States. But I reckon first, let's bring it back to what we're here for and hear what you've got. [00:16:56][9.8]

Alec: [00:16:57] OK, so the first company that I have is a company that a lot of people will know. We've actually touched on on this episode already. And we have interviewed one of their portfolio managers a couple of times. So the first stock I'm going to pick is Magellan Financial Group. Nice not the funds themselves, but the overarching funds management company. [00:17:16][19.4]

Bryce: [00:17:17] So business, the business. [00:17:19][1.5]

Alec: [00:17:19] Yeah. Yeah. So their business is funds management. They run a number of different funds they have at the end of the financial year. Ninety seven billion dollars in assets under management, a spread across a number of funds. So I'll just get straight into the pitch and then we can have a chat about it from there. Yeah. So it's undeniable that Magellan has had unbelievable growth over the past decade. But over the past five years, its funds under management have grown at just shy of 25 percent a year. Its revenue, its income have all grown hugely over the last five years. [00:17:55][35.4]

Bryce: [00:17:55] And when you say funds under management has grown, you're saying the inflow of new cash into the business. [00:17:59][4.3]

Alec: [00:18:00] Yeah, the money that it manages as its business. [00:18:02][2.8]

Bryce: [00:18:03] And why is that important? [00:18:04][0.6]

Alec: [00:18:04] Because the way that funds managers make money is from phase. And so Magellan, it's blended right, like its average management fee across the money it makes is point six percent. So the more funds under management it has, the more fees it makes, which is revenue. And then it deals with its operating expenses as a business and then the rest is profit. So to give you some numbers of the 97 billion that it was managing at the end of FY 20, it made about 700 million in revenue and of that, just shy of 400 million in profit. So just great margins as well, 57 percent profit margin, nothing to [00:18:49][45.2]

Bryce: [00:18:50] nothing shy away from [00:18:51][1.0]

Alec: [00:18:52] now. The biggest criticism of Magellan is its valuation. It trades at a as of today, twenty nine price to earnings ratio, which is which is expensive for a fund manager. But the reason that I'm pitching it is because I think it can justify that valuation if it can continue its growth rate. I've done some simple numbers, then I'll explain why I think those numbers are reasonable. So if you project out five years and you apply its current growth rate in terms of its funds, under management, you get to about two hundred and eighty eight billion in funds under management, which is huge over the next five years, at the end of five years. That's how much it will have, which is massive. It's it's a big step up from where it is now. If it can continue that growth right. And it keeps its management fairly stable, it will do about one point seven billion in revenue and just shy of a billion dollars in profit. It's currently valued at eleven billion dollars. So it's not a sudden unreasonable valuation. A lot of people will be listening to this and thinking, trying to maintain that. Right. Right. Growth, right. Yeah. Is a stretch. Yeah. But even if you have its growth. Right, so if you take it sort of 12 percent growth in funds under management a year, it still comes to about one hundred and seventy billion in funds under management at the end of year five and over a billion dollars in revenue of that. If it does over a billion dollars in revenue, it will do about, on my numbers, about 600 million in earnings. And it will, you know, again, then the multiple doesn't look so rich. So then the question is, what would be the reasons that it can continue its fund inflows? And I think it is positioning itself well for its next stage of growth in a couple of key areas. So the first one is it's got a slew of new products that it's releasing. So it announced three new ATF style products that are going to be Exchange-Traded Active Exchange traded products. And then also it's announced a retirement income product. So whilst it's funds, inflows to its existing funds may slow down, the new funds should say pretty significant inflows. The second reason, and this is part of a broader thesis I have around the market, is I expect there will be a mean reversion in asset flows between passive and active fund managers. I think, you know, since 2008, ETFs have killed it and there's great reasons for that. But I. I think there will be a main reversion as markets get more volatile, things get more uncertain, potentially we get into more of a multipolar world where the U.S. isn't just this dominant market and everyone just wants to invest in the NASDAQ and the S&P 500. And I think it will become harder and harder to generate alpha like generate outperformance by just investing in the big six tech stocks. And if that happens, then active management will start to outperform. And if active management stocks outperform, then money will flow to where the performance is. So I think that's the second reason why I think that I expect there will be a shift in the way funds flow, especially from the bigger institutions and endowments and stuff like that. And then the third reason is I think there will just be a emphasis on quality managers. And I think Hamish Douglass is the best manager in Australia. If other managers want to put that hat in the ring to be the best manager, then we're welcome to hear you out on the show. But I think if things get more uncertain, if it markets get more difficult, you're going to want the best manager managing your money and you're going to be willing to pay for that. And so I think those three reasons, the new products, the return to active management and a focus on quality managers should keep the funds flowing to Magellan. So that's really my pitch. There's not too much complexity to it in terms of the business. I think similar to what we was saying about CSL before, Magellan is a business that everyone agrees is a great business that is run by great managers. And the only question is valuation. I can get comfortable enough with the valuation. I mean, I don't love it, but I don't hate it. And so I think that's my pitch nice. [00:23:20][268.8]

Bryce: [00:23:21] So it certainly doesn't seem unrealistic. That's my first comment. You know, given the figures you've put there. I love it. Obviously. Love Magellan. Spoken to Chris Weldon a couple of times. [00:23:31][10.5]

Alec: [00:23:32] And this is actually all just part of a broader plan to get him on the podcast. [00:23:35][3.6]

Alec: [00:23:36] Yes. [00:23:36][0.0]

Bryce: [00:23:37] So a couple of questions you mentioned around the growth coming from reversion, new products and also quality management. What do you think from a competitive advantage point of view? Why do you think they're going to be able to keep their face as they are? They are on the higher side of the market, you know, and they sort of charge a premium fee. So what what is it about them that allows them to to do so and and perhaps sustain that over the next five years, given that broadly we've got more and more come into the market, putting more pressure on low fees, low fees, low fees? [00:24:12][34.9]

Alec: [00:24:13] I think I think the willingness to pay fees isn't an outcome of performance like fees. And this is ironic, given that we have an official stance against, yes, we hate phrases in our podcast. But the thing is, fees are only exorbitant when the relative performance doesn't justify the face. And so we hate fees. If you're going to pay fees to a manager, that will get you market average returns when you can get those market average returns in a low cost ETF, the fees are not justified in that. This is just my personal view of the market, is I don't think the good times that we're in now can last forever where the market just keeps grinding upwards. And, you know, it's impossible for large cap managers to generate outperformance because the index is just so strong. And really all you need to do is make a concentrated bet on technology companies and you'll outperform everyone. I just don't I don't see how that can last. And so for me, if Magellan are able to distinguish themselves as quality managers that can generate Alpha, that can generate outperformance because of their better quality management, then the fees on a relative basis relative to performance start to become not as big a concern for a lot of people is my thesis. Yeah, yeah. I want to really be clear on that. Yeah, I could be completely wrong, just like I was wrong about some of my stocks. [00:25:42][89.1]

Bryce: [00:25:42] I think another part of your thesis that I found interesting is that you do think there's going to be a mean reversion back to active management. I think the trend at the moment is very clear that a lot of money is going the other way. On the [00:25:58][15.5]

Alec: [00:25:58] contrary, I love [00:25:59][1.4]

Bryce: [00:26:00] it. I love it. I'm very interested to see how it plays out. So, OK, that's one of the competitive advantages they have, I guess, is their ability to charge a higher fee in terms of the revenue that they can generate. Let's speak about people and culture briefly. Is this a business that needs Hamish Douglass as the headline? [00:26:18][18.7]

Alec: [00:26:19] That is a good question. I'm going to deflect the question and say this is an investment personally that. Natoma's Douglass's the headline, I'm sure the business would do incredibly well if you know Chris or any of the other people at Magellan, run it for me. You can get comfortable with the valuation if Hamish is running it. So, yeah, if Hamish left, I would probably want to take a look at this in the portfolio and interesting. Maybe sell it. But you know what? If Hamish left, the market would probably punish it before he could sell it. [00:26:50][31.1]

Bryce: [00:26:51] So interesting. Yeah. Yeah, I agree. He's absolutely a magnet for money at the moment. So, yes, it's almost an investment in Hamish Douglass at this stage. [00:27:01][10.4]

Alec: [00:27:02] Yeah, not a bad one. [00:27:03][1.2]

Bryce: [00:27:03] Cool. So in terms of time horizon here, you know, you've forecast out sort of five years. Do you have any thoughts on that or is this just in in and let's let it run. [00:27:13][10.0]

Alec: [00:27:14] Prove me wrong. Big fund managers. But at some point, historically, what we've seen is that at some point it becomes harder to generate Alpha because you have so many assets under management, because you just have so much cash that you need to invest, it becomes incredibly hard to find good opportunities that fit your size. And I mean, the classic example of that is Berkshire Hathaway, where, you know, Buffett and Monga say that if they if they were managing a million bucks a year, they could get 50 percent returns a year. But because they're managing, what, over 700 billion dollars in assets, they say, yeah, well, that yeah, that's not all liquid positions. That's also like holding companies and stuff like that. But still, the hold that they're fishing from and the acquisitions that they can make that generate a good enough return for that fund. Just there's less opportunity. There's just less less fish in the sea. So, look, at some point, Magellan may face a similar situation. They may face the fact that their funds under management are so large that it becomes difficult to generate Alpha. And so that would probably be my biggest. I don't I don't have a set time horizon, but that is something that you would want to pay pretty close attention to. If their performance consistently was sort of in line with market average performance, then you would be like, well, does it justify that phase? [00:28:37][83.0]

Bryce: [00:28:37] Yeah, and that's an important thing to recognise. It's what is going to need to change for you to, I guess, reconsider your thesis. I'm speaking more broadly here, so. Yeah, good point. All right, Ren. Well, it's currently trading at sixty two point and eighty four cents, twenty first of August. So that's going to be our big Bryce. Yeah. And we're going to throw a thow into it. [00:29:00][23.3]

Alec: [00:29:01] Yeah. Let's do it. [00:29:02][0.9]

Bryce: [00:29:02] Yeah. Yeah. Throw in a thow, taking into consideration brokerage as well. So we'll update the portfolio as the second member and chief investment officer, I agree with the investment so we can officially make that our first one. [00:29:17][15.5]

Alec: [00:29:18] Great. I mean, look, I still feel a little bit cheated. Are you hung out to dry here? [00:29:22][4.7]

Bryce: [00:29:23] No, look, we're in this together, and there's a number of other things that we wanted to discuss in terms of adding some of those bigger names to the portfolio. Yeah, Apple, you Facebook's around that conversation. Unfortunately, though, we have run out of time to do so. So we will make sure that we do that in next episode. [00:29:41][17.8]

Alec: [00:29:41] For the time being, let's put the big six stocks on our watch list. Yes, maybe not Netflix. We can have that discussion offline. Have a look on our website to see which ones we landed on. Yeah, we put CSL on the watch list. I also want to put baby bunting and Cleanaway on the watch list. Yeah, definitely. They were true that were very close to my pitches today. So CSL, baby bunting, Cleanaway, Amazon, maybe not Facebook, Amazon, Apple, Spotify. [00:30:08][26.8]

Alec: [00:30:09] We'll have the discussion about the tech stocks. Yes. Next episode. Next steps. [00:30:12][3.0]

Bryce: [00:30:12] Yeah, OK, definitely. And keeping in mind that we do have our expert watch list as well. We had Nick Creegan pitch the Ritchie Brothers, which since that episode have done phenomenally well. [00:30:21][8.9]

Alec: [00:30:22] Yeah. [00:30:22][0.0]

Bryce: [00:30:22] So good to have that part of the portfolio. And we interviewed Lyn Alden this morning, which will be an exciting episode to release. And she also [00:30:29][6.9]

Alec: [00:30:29] pitched ten, ten [00:30:30][1.1]

Bryce: [00:30:31] cents. So we'll be adding that as well. [00:30:32][1.6]

Alec: [00:30:32] And we asked Chris Weldon and he also said ten, didn't he? [00:30:35][2.6]

Alec: [00:30:35] Yeah, yeah, yeah. So maybe that's something that this [00:30:40][4.6]

Alec: [00:30:40] episode could just go on for a while. But I also, like, enjoy the Chinese retail stock. OK, I'm going to put out on the watch. This is all unsolicited. [00:30:48][7.7]

Alec: [00:30:48] I would say this is God. All right, [00:30:50][2.0]

Bryce: [00:30:51] Ren. Well, we'll leave it there. Nice pitch. Good work. Loved it. You've really set the bar high for me next week to come in and pitch cash [00:30:57][6.3]

Alec: [00:30:58] on bitcoin cash, bitcoin cash. [00:31:00][2.4]

Bryce: [00:31:01] Look, we'll leave it there. Great to get this off the ground and looking forward to seeing how it pans out. [00:31:06][4.5]

Alec: [00:31:06] If people want to throw suggestions in, send them in. We want to set up like a voicemail thing where you can leave a message that we can play on the show where you pitch the stocks or we can call you. But in the meantime, just send them in on Facebook or over email. We've had a few pitched already, but we'll chalk up on a listener's watch list. Or something, no vortex, which seems to get a big run in our Facebook group points, but zip Breville, there's a few others, so keep sending them in. We'll make sure we feature them in due course, EPIK. [00:31:37][31.4]

Bryce: [00:31:38] All right. Well, we'll leave it there. And looking forward to chatting next week. [00:31:41][2.9]

Alec: [00:31:41] Not Nashwa. [00:31:42][0.2]

Speaker 5: [00:31:42] Thanks for listening to Equity Mates investing podcast production of Equity Mates Media. Please remember that everything you hear in Equity Mates investment podcast is general advice on link. The content has been prepared, not knowing your personal objectives, specific financial circumstances or goals. The host of Equity Mates Investment Podcast, May 19 positions in the companies discussed before considering any investment. Please read the product disclosure statement and consider speaking to a licenced financial professional. [00:31:42][0.0]

[1644.7]

Get the latest

Receive regular updates from our podcast teams, straight to your inbox.

Start your week the right way with five of our favourite articles from the past week. Read what the team at Equity Mates are reading and expand your knowledge of the world of finance and business.
The perfect compliment to our Get Started Investing podcast series. Every week we’ll break down one key component of the world of finance to help you get started on your investing journey. This email is perfect for beginner investors or for those that want a refresher on some key investing terms and concepts.
The world of cryptocurrencies is a fascinating part of the investing universe these days. Questions abound about the future of the currencies themselves – Bitcoin, Ethereum etc. – and the use cases of the underlying blockchain technology. For those investing in crypto or interested in learning more about this corner of the market, we’re featuring some of the most interesting content we’ve come across in this weekly email.