Chris Cuffe, the chairman of the $650 million Hearts and Minds Investments, says lifting performance is the best way to lift the share price of the high-profile philanthropic-focused fund after its backers got caught up in the brutal tech rout.
Hearts and Minds Investments, which trades under the ticker HM1, has directed $33.9 million to medical research charities since it listed in 2018. But it’s been a tough 12 months for investors in the listed fund, which has slid 45 per cent, compared to a 5.3 per cent fall in the local market.
The fund was created on the back of the highly successful Sohn Hearts & Minds investment conference, in which the top fund managers in Australia and the world pitch their best investment ideas.
The event is now in its seventh year and will be held in Hobart after the pandemic forced the last two events to be held virtually. But the selection of speakers has taken on added importance as the board of the fund looks to recover value after a year in which net assets fell by $220 million.
“Last year we had a lot of managers who liked tech growth, and obviously that got slammed fairly hard,” Mr Cuffe told The Australian Financial Review.
“Although we don’t choose the stocks, we choose the managers that come.”
Mr Cuffe said he was also not concerned by the 15 to 20 per cent discount of the share price relative to the fund assets, as he says an improvement in performance will resolve that issue.
“I’m not a fan of most things people try [to close discounts] because they missed the one and only thing that works, which is performance,” he said.
“We just got to knuckle down on performance, and we think we’ve put plenty of effort into improving that.”
Sohn Hearts & Minds co-founder Matthew Grounds said the initial investors in HM1, including himself, have got a positive return while helping to contribute over $40 million to medical research.
“We’re all major shareholders and some of us have topped up, so we’re leaning in,” he said.
At June 30, the fund’s largest investments were Alphabet, Formula 1, Microsoft, Zillow and IDP Education.
The creation of HM1 has ensured that medical research charities have continued to benefit from the conference as the fund managers waive their investment fees so that an amount equivalent to 1.5 per cent of assets is distributed to participating charities.
That has led to $33.9 million being donated to charities via the fund and over $40 million in donations in total.
The charities include the Victor Chang Cardiac Research Institute, the Black Dog Institute, the Cerebral Palsy Alliance Research Foundation, and several others.
While the full roster of speakers for the November event has yet to be disclosed, some have been locked in. Tim Carleton, of Auscap, Peter Cooper, of Cooper Investors, and Nick Griffin, of Munro Partners, are set to return.
Claremont’s Bob Desmond, WaveStone’s Catherine Allfrey and Regal’s Tim Elliott will make their debuts, while new offshore and domestic speakers will be unveiled closer to the event.
A 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.
Luke Harding, an author and Russia expert, will also feature as a keynote speaker, as the event adds Hobart to Sydney and Melbourne as previous host cities.
In fact, Sohn Hearts & Minds co-founder Guy Fowler explained that it was part of the marketing of the HM1 in 2019 that Ed Kemp, key adviser at Melbourne firm Evans & Partners, pitched the idea of hosting the event in Tasmania.
He rallied his contacts in Hobart and within two weeks support had been secured from the Tasmanian government to host the event. The COVID-19 pandemic meant that it’s been a two-year wait, but 400 tickets have already been sold.
The Australian Financial Review is a media partner of the Sohn Hearts & Minds Investment Leaders conference. Tickets are on sale here.
This article was originally posted by AFR here.
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