+$70M
DONATED
209
speakers
7700
attendees
250
partnerships
Mr Aboud, who helps oversee Perpetual’s long-short strategy, is among the portfolio managers that will present their best stock ideas at the Sohn Hearts & Minds event in Hobart on Friday.
He is making his second appearance having tipped Corporate Travel Management as a short idea at the inaugural event in 2016, and this year his message is that corporate conservatism will prevail.
“We think that balance sheets, for the first time in a while, matter,” Mr Aboud said, as he pointed to the August earnings season as evidence of a shift toward exalting financial strength.
“Transurban and Dexus disappointed with their EPS [earnings per share] guidance because the cost of debt was higher. That is going to be a slow-moving beast because a lot of companies have hedged interest costs so as that debt rolls off it becomes a headwind.”
On the flipside, he says companies that are net cash are all of a sudden in a good position.
“McMillan Shakespeare, A2, Omni Bridgeway and oOhMedia! all announced buybacks. That’s because they can.”
Mr Aboud said that in an uncertain and complex macro environment balance sheet flexibility will give companies an edge.
“When things are cheap enough companies with cash can buy back stock and that can put you in good stead.”
Perpetual’s equity fund managers have a long history of obsessing over balance sheets. They also have a reputation as value investors. But Aboud is quick to clarify that it doesn’t mean they look at old world “cement mill” businesses.
“We see value in some of the growth stocks that have de-rated a lot and property trusts that have de-rated massively because of interest rate expectations,” says Aboud.
This year has been dominated by macro forces as rising inflation, and the response to it by central banks, drives market performance and sectors. It was also a good one for the long-short fund.
According to the Mercer survey, Perpetual’s long-short share plus fund eked out a 3.8 per cent gain over the year to September 30, 2022, compared to an 8 per cent decline in the S&P/ASX 300. Over both three and five years, the strategy Aboud oversees has delivered a 9.8 per cent annual return, compared to the market’s 2.7 per cent and 6.7 per cent returns.
Aboud said the fund succeeded by shorting non-profitable tech stocks that he described as “ridiculously overvalued” such as Peloton and Zoom, while also betting against e-commerce names on the ASX, some of which are now lower than their pre-COVID-19 levels.
The hedge fund manager said a total reversal in fortunes for the pandemic winners is not surprising as their success spurred investment from competitors.
“The biggest threat to companies is unknown competition. That usually gravitates to hot sectors, so incumbents end up in a worse situation than they were at the beginning.”
The e-commerce stocks, he said, have faced added pressure from the cost of Google Adwords as larger bricks and mortar players muscle in on their digital turf.
“So there was a squeeze on the top and the bottom line as the COVID [sales surge] was rolling off.”
But the challenge with shorting fast-growing tech stocks is getting the timing right. Aboud utilised strict stop-loss limits on trades, but then added to positions when they were working. The patience to wait for the interest rate environment to change was also required.
“We thought once interest rates got off zero, markets would start focusing on the sustainability of the business.” But the beaten-up tech sector is now where there is money to be made on the long side, he said.
“Where the opportunities are is usually where everyone’s running away from and that is long duration stocks.”
It didn’t all go to plan though in 2022. Aboud said positions in non-bank lenders haven’t worked out, and he will be more apprehensive when companies in a single industry simultaneously storm the market to float.
“It’s a bit of a red flag,” he said, citing aged care as another example.
Aboud will be presenting a long idea this time at the Sohn event, and will steer clear of making grand predictions about the future.
In a market where the macro has been such a powerful force, stockpickers need to resist the urge to become experts on everything from epidemiology to geopolitics to inflation, he said.
“Everyone gravitates to the narrative of the day and becomes an expert, but it doesn’t necessarily help you unless you take it, move forward and try and predict the future.
“That’s a long way of saying that you have to wake up every day with an open mind. If you start becoming an expert on a topic, it becomes very hard for you to shift your view.”
His view is shifting to one in which the macro indicators are deflationary. But central bank policy is still the main game for investors.
In that regard, there are two big questions that will drive markets in the near term: the first is how deep a recession has to be before the Federal Reserve enacts the so-called Fed put and comes to the market’s aid.
“The [price of the Fed put] is lower than it has historically been. But how much pain will need to occur before it’s exercised?”
The second is how responsive central banks will be if parts of the financial system break. “When interest rates rise as quickly as they do, things will go bump in the night that you don’t know about.”
The Australian Financial Review is a media partner of sohnheartsandminds.com.au
This article was originally posted by the AFR here.
Licensed by Copyright Agency. You must not copy this work without permission.
Technology behind the tech; healthier lifestyles; the green transition and regulatory tailwinds. These are the mega-themes the smartest minds in the market are now firmly getting behind which they believe can help them deliver outsized profits.
Fund manager turned anti-corruption campaigner Bill Browder is advising investors to hang on to their cash until central banks stop raising interest rates and the cost of living starts to come down, before investing it strategically.
The Sohn Hearts & Minds Investment Leaders Conference, held annually, had before Friday’s event made more than $40m in collective donations to medical research. It applies the stock picks made by fund managers in an investment portfolio.
Professional gambler and arts impresario David Walsh had a brutal message for successful top money managers – you may just be lucky.
A room filled with 700 of the country’s financial luminaries and billionaires is a difficult place to pitch an investment idea but it’s a great place to raise money for charity.
Two hundred of Australia’s best and brightest money managers, bankers and entrepreneurs toasted the seventh Sohn Hearts and Minds conference at David Walsh’s Museum of Old and New Art, better known as MONA, in Hobart on Thursday night.
Top global money managers are telling investors to steer clear of companies that don’t make money and invest instead in unloved but profitable businesses, as continuing central bank interest rate rises threaten to keep markets falling.
Some of the top fund managers in the country will on Friday pitch their best investment ideas to the Sohn Hearts & Minds conference.
Perpetual’s star stock picker Anthony Aboud says companies with strong balance sheets will finally be rewarded for their discipline in an environment of rising interest rates and global market upheaval.
Perpetual’s top stock picker Anthony Aboud makes his money running against the crowd and this is why property trusts like Charter Hall are sitting right the top his list right now.
Twenty students from Kingston High School have been given the opportunity to attend the prestigious Sohn Hearts & Minds conference this week.
Gerry Cardinale, the owner of AC Milan and a host of other soccer, cricket, baseball and ice hockey assets is trying to double his money in the ‘resilient’ asset class.
Carleton’s conviction will be on full display on Friday, when he makes his third appearance at the annual Sohn Hearts & Minds Investment Leaders Conference, where stock-pickers share their best ideas in the name of medical research.
James Miller, a portfolio manager at Firetrail Investments, believes investors need to stop seeing the global decarbonisation push as a risk – and start seeing it as an opportunity.
Maggie O'Neill, Head of Marketing and Operations at HM1 joined Nick Griffin, CIO of Munro Partners to discuss the history of Hearts & Minds, Munro Partners' involvement and Nick's upcoming stock pitch.
Bob Desmond is Head of Claremont Global and Co-Portfolio Manager. He will present at the Sohn Hearts & Minds Investment Leaders Conference in Tasmania on November 18.
An increasing intransigence from authorities in Beijing toward private enterprise - and harsh pandemic restrictions - might be keeping some investors away, but the same factors are creating good opportunities in Chinese stocks.
Joyce Meng is a presenter at this year’s Sohn Hearts & Minds Investment Leaders Conference on November 18, which takes place in Hobart and aims to raise money for medical research.
Founder, CIO and CEO of Eminence Capital Ricky Sandler talks about his journey launching the $5.7 billion dollar asset manager, how the market has changed over the past decade and his motivations for participating in this year's Sohn Hearts & Minds conference.
Munro’s Nick Griffin on why he prefers Alphabet and Amazon over Meta, shorting industrials and Chinese equities, and his top picks for the energy transition.
When Auscap Asset Management founder Tim Carleton tips a stock at this month’s Sohn Hearts & Minds conference in Hobart, he doubts it will be a name that shocks investors.
One of the nation’s most influential fund managers has warned that investment markets have entered a “new phase”, with hidden risks in the form of debt sitting in super funds, private equity and big investors that is set to test the financial system.
The veteran fund manager says the most uncertain period of his career will deliver huge opportunities – providing his firm can stick to its system.
When former Amcor chief executive Ken MacKenzie was named the new chairman of BHP five years ago, that was a sign for top-rated fund manager Peter Cooper to move back into the mining giant.
Speaking to The Australian Financial Review before the Sohn Hearts & Minds conference, Sandler named global on-demand ride-sharing and food delivery service Uber Technologies among his top picks, alongside real estate marketplace Zillow.
Jun Bei Liu is the lead portfolio manager at Tribeca Alpha Plus Fund. Ms Liu is set to present an investment idea at the Sohn Hearts & Minds conference in Tasmania on November 18.
Desmond, who worked in London before moving to Australia in 2008, is making his first appearance at the annual Sohn Hearts & Minds Investment Leaders Conference, where fund managers give their favourite stock tips to raise money for medical research charities.
Regal’s hedge fund focused on the resources space has thumped the market and its top stock picker, Tim Elliott, says resources stocks are still cheap.
The WaveStone principal says retail will drop away but quality operators will find a way through.
Catherine Allfrey, Principal and Portfolio Manager of WaveStone Capital will be speaking at this year's Sohn Hearts & Minds Conference in Hobart which raises funds for Australian medical research.
There are many descriptors for Browder, including Russia’s anti-corruption crusader, and its most dogged oligarch hunter. But it’s his title as Putin’s No.1 foreign enemy that bestows on him another label - consummate survivor.
Bill Browder, once the largest foreign investor in Russia and the man behind the global Magnitsky justice campaign, says the US is the weakest link in the war in Ukraine.
Bill Browder, the fund manager who has become one of Vladimir Putin’s fiercest critics, says the Russian leader is increasingly desperate, but no less dangerous.
On November 18, Griffin – with $4.7bn under management at Munro Partners – heads to Hobart for this year’s face-to-face pitch to investors on his 2023 pick.
Tim Carleton, founder of Auscap Asset Management and 2022 Conference Fund Manager sat down with Equity Mates to discuss his investment philosophy and what makes a great Australian company.
When investor Kara Nortman and actor Natalie Portman decided to start a soccer team, they created a brand that has grabbed the sporting world’s attention.
Australia’s sports leagues are being held back by a culture of conservatism and need to be more open to private equity investment or risk falling behind, investors say, with Netball Australia’s rejection of a $6.5m bailout cited as just one example of administrators’ aversion to private capital. Conservative Australian sports leagues are ‘letting investment opportunities pass them'.
Sporting teams and leagues are becoming serious investments for global firms managing billions of dollars, as private equity funds eye off the sector’s growth potential and resilience to economic slumps.
Bill Browder, one of Russian President Vladimir Putin’s fiercest critics, the founder of Hermitage Capital and the man behind the Magnitsky Law on human rights, will headline this year’s Sohn Hearts & Minds investor conference.
A financier and political activist who is viewed as a key enemy of Russia’s government will address Australian investors on the war in Ukraine at this year’s Sohn Hearts and Minds conference, as the conflict continues to have a major influence on global markets.
Keynote speaker will be Bill Browder, the former Hermitage Capital hedge fund manager that has become an arch nemesis of Russian President Vladimir Putin, as he has lobbied governments to black-list senior Russian officials attempting to shift their assets offshore.
