Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 181

Best ideas from Alex Waislitz, Hamish Douglass, Anthony Aboud

These are presentations from the Sohn Hearts & Minds Investment Leaders Conference in Sydney on 11 November 2016. Each high-profile portfolio manager is given 10 minutes to explain their investing strategies and include one major investible insight.

Alex Waislitz

Alex Waislitz is the Founder and Chairman of the private Thorney Investment Group, one of Australia’s most successful private investment groups.  He has extensive business and capital markets experience and is Vice President of the Collingwood Football Club Limited.

Best idea: Mesoblast

Mesoblast is a world leader in innovative cellular medicines. It internationally recognised in the fields of stem cell biology, autoimmune diseases, organ transplantation, and heart failure. This company has a clear focus on addressing major health issues such as back pain, heart attacks and arthritis. It is far from a start up, and is in advanced stages of product trials to Phase 3 levels under eye of the FDA.

We have been critical of management in past and the company has experienced periods of short-selling but it is undervalued at $300 million. It has patented technology in late stage testing. Many other countries are offering support, especially Singapore which has built a tech centre around a Mesoblast facility. It has world class technology especially in reducing inflammation and rebuilding tissues.

Alex introduced Dr Silviu Itescu, the CEO of Mesoblast. His company focusses on diseases with high unmet needs and patentable technologies. It’s a high margin business with multiple products and over 700 patents across major jurisdictions.

In US alone, 6 million people suffer heart failure each year, growing at one million a year. The current trial includes over 300 patients being treated for heart conditions with potential sales in the billions. Chronic lower back pain is also producing excellent trial results.

Strategic partnerships have been established across the world and staff have excellent scientific pedigrees. In response to pressure from shareholders, cash reserves of $60 million result from reduced cash burn and better operational efficiency. Some major milestones are coming up.

Hamish Douglass (pictured on home page)

Hamish is Co-Founder, Chief Executive Officer and Chief Investment Officer of Magellan Financial Group and the Lead Portfolio Manager of Magellan’s Global Equities Strategies. Hamish was formerly Co-Head of Global Banking for Deutsche Bank AG in Australia and New Zealand.

Best idea: Apple

Apple is Magellan’s largest investment, although Doglass knows most consumer electronics companies lose their value – consider Motorola or Nokia. But in Apple’s case, the risk of commoditisation is low, as Apple is no longer a consumer electronics company and its operating system is in a duopoly with Android. Apple's platform has enormous potential to monetise many facets of the business in the future.

Replacement phones now make up 70% of phone sales, not new user phones. Selling of new iphones is almost irrelevant, but the market focusses on the quarterly numbers. The number of people owning an iphone is growing at 30% a year. It’s a predictable installed base and replacement phones. Apple will sell 220 million replacement iphones next year, even though only 42% of world’s population owns a smart phone.

99% of people who own an iphone are satisfied with it, and 95% will stay with Apple. There are high switching costs due to the downloading of aps, and there is an entire ecosystem of technology including home devices and wearables.

Apple Pay is another valuable business, already used by 17% of iphone owners, and it will be a massive part of global tap and pay.

Apple is good value as it trades at a 33% PE discount to the overall US market as it’s on a PE of 12.2 cash-adjusted. It’s a great opportunity to buy into a world class company.

Anthony Aboud

Anthony is Portfolio Manager of Perpetual's SHARE-PLUS Long-Short Fund. He has over 17 years' experience including manager and analyst roles with Perpetual, Ellerston Capital and UBS Investment Bank.

Best idea: Corporate Travel Management (ASX:CTD) - take a short position

Most travellers do their own research on travel, which has led to great success stories like Priceline and Expedia. Over 70% of land-based travel agencies have closed in recent years.

What are the differences between corporate travel and leisure? None that are significant.

CTD has risen dramatically and exceeded earnings expectations by buying businesses on low PE multiples and by some PE magic, they suddenly become worth more when valued at CTD’s multiple. But we believe these roll ups of professional services companies do not end well. Standalone, without the listed company buying, these businesses would be worth 4 times earnings. A company with earnings of $1 million should be worth $4 million but it’s suddenly worth a $20 million valuation on PE of 20.

There is a particular issue when the now cashed-up founder walks out of the company after a year or two.

CTD has been paying higher multiples and larger amounts to sustain its acquisition programme. Much of earnings come from recently businesses acquired at 9 to 10 times multiple. We also notice that senior executives have been selling the stock in last few years. Presentations are impressive marketing pitches full of positive stories, which have led to the current PE of 34.

But it’s crucial with any shorting to pick the size and timing of positions and not go all-in, as a stock can keep rising and test the resilience of the view, especially when it’s a contrarian position.

 

This is general information and the investments may not be suitable in many portfolios as the personal circumstances of investors are unknown. Cuffelinks accepts no responsibility for the performance of the investments and this is the author's version of the talks.

 


 

Leave a Comment:

     
banner

Most viewed in recent weeks

Is it better to rent or own a home under the age pension?

With 62% of Australians aged 65 and over relying at least partially on the age pension, are they better off owning their home or renting? There is an extra pension asset allowance for those not owning a home.

Too many retirees miss out on this valuable super fund benefit

With 700 Australians retiring every day, retirement income solutions are more important than ever. Why do millions of retirees eligible for a more tax-efficient pension account hold money in accumulation?

Is the fossil fuel narrative simply too convenient?

A fund manager argues it is immoral to deny poor countries access to relatively cheap energy from fossil fuels. Wealthy countries must recognise the transition is a multi-decade challenge and continue to invest.

Reece Birtles on selecting stocks for income in retirement

Equity investing comes with volatility that makes many retirees uncomfortable. A focus on income which is less volatile than share prices, and quality companies delivering robust earnings, offers more reassurance.

Comparing generations and the nine dimensions of our well-being

Using the nine dimensions of well-being used by the OECD, and dividing Australians into Baby Boomers, Generation Xers or Millennials, it is surprisingly easy to identify the winners and losers for most dimensions.

Anton in 2006 v 2022, it's deja vu (all over again)

What was bothering markets in 2006? Try the end of cheap money, bond yields rising, high energy prices and record high commodity prices feeding inflation. Who says these are 'unprecedented' times? It's 2006 v 2022.

Latest Updates

Superannuation

Superannuation: a 30+ year journey but now stop fiddling

Few people have been closer to superannuation policy over the years than Noel Whittaker, especially when he established his eponymous financial planning business. He takes us on a quick guided tour.

Survey: share your retirement experiences

All Baby Boomers are now over 55 and many are either in retirement or thinking about a transition from work. But what is retirement like? Is it the golden years or a drag? Do you have tips for making the most of it?

Interviews

Time for value as ‘promise generators’ fail to deliver

A $28 billion global manager still sees far more potential in value than growth stocks, believes energy stocks are undervalued including an Australian company, and describes the need for resilience in investing.

Superannuation

Paul Keating's long-term plans for super and imputation

Paul Keating not only designed compulsory superannuation but in the 30 years since its introduction, he has maintained the rage. Here are highlights of three articles on SG's origins and two more recent interviews.

Fixed interest

On interest rates and credit, do you feel the need for speed?

Central bank support for credit and equity markets is reversing, which has led to wider spreads and higher rates. But what does that mean and is it time to jump at higher rates or do they have some way to go?

Investment strategies

Death notices for the 60/40 portfolio are premature

Pundits have once again declared the death of the 60% stock/40% bond portfolio amid sharp declines in both stock and bond prices. Based on history, balanced portfolios are apt to prove the naysayers wrong, again.

Exchange traded products

ETFs and the eight biggest worries in index investing

Both passive investing and ETFs have withstood criticism as their popularity has grown. They have been blamed for causing bubbles, distorting the market, and concentrating share ownership. Are any of these criticisms valid?

Sponsors

Alliances

© 2022 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. Any general advice or ‘regulated financial advice’ under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.

Website Development by Master Publisher.