Meet the Managers – August 2018 Stephen Bennie, Partner March 2020 Stephen Bennie
Disclaimer • This information is intended solely for the use of wholesale investors, as defined in the Financial Markets Conduct Act 2013 (New Zealand) and wholesale clients as defined in the Financial Advisers Act 2008. It is not for general public distribution. By receiving this information you represent that you are a wholesale client. • Past performance is not indicative of future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested. This information does not purport to be a comprehensive statement or description of any markets or securities referred to within. Tax assumptions and reliefs depend upon an investor’s particular circumstances and may change if those circumstances or the law change. Prospective investors should not rely on this information and should make their own enquiries and evaluations they consider to be appropriate to determine the suitability of any investment (including regarding their investment objectives, financial situation, and particular needs) and should seek all necessary financial, legal, tax and investment advice. If you invest through a third party provider you are advised to consult them directly as charges, performance and terms and conditions may differ materially. • This information is not intended to be nor should it be construed as advice. This information is not a recommendation to sell or purchase any investment. It does not form part of any contract for the sale or purchase of any investment. Any investment application will be made solely on the basis of the information contained in the relevant fund's offer document (including all relevant covering documents), which may contain investment restrictions. This information is intended as a summary only and (if applicable) potential investors must read the relevant fund's offer document before investing. • This information has been prepared using information from a variety of sources. The information is believed by Castle Point to be correct but no warranty is made with respect to its completeness or accuracy. All opinions and estimates in this information are subject to change without notice. Castle Point is not under any obligation to update this information to the extent that it is or becomes out of date or incorrect. This information is confidential and must not be made available, published or distributed to any third party without the prior written consent of Castle Point.
Investment Team Richard Stubbs Stephen Bennie Jamie Young Gordon Sims Portfolio Manager & Portfolio Manager & Portfolio Manager & Role Analyst Analyst Analyst Analyst M.Math (1 st Oxford) M.Com (Hons 1 st ) B.Com (Hons) M.Finance Education B.Sci CFA CFA CFA Industry 26 years 26 years 12 years 9 years Experience 3
Investment Team Richard Stubbs Stephen Bennie Jamie Young Gordon Sims Portfolio Manager & Portfolio Manager & Portfolio Manager & Role Analyst Analyst Analyst Analyst M.Math (1 st Oxford) M.Com (Hons 1 st ) B.Com (Hons) M.Finance Education B.Sci CFA CFA CFA Industry 26 years 26 years 12 years 9 years Experience What type of sardine are you eating? 4
Castle Point – what makes us different? • Boutique - we know our clients and they know us • Aligned - invest in our funds alongside clients • Focused - all we do is manage money for our clients • Boutique Manager of the Year • Australasian Equity Manager of the Year 5
ESG • ESG is very important to Castle Point • Integral part of our investment process • UN PRI Signatory • Boutique Manager of the Year • Australasian Equity Manager of the Year 6
Recommended reading 7
Expensive tin of sardines 8
The Trading Sardine 9
The Trading Lobster 10
The Trading Sardine 11
Investing or trading sardines? • Investors own equities for the earnings a business generates • This means they generally own shares for many years • Which is effectively opening the tin and eating the sardines • No or little earnings gives them a sick feeling – aka high PE • Traders and speculators buy to sell at a higher price ASAP • This can mean owning shares for days or maybe just hours • They have no intention of opening the tin of sardines • They do not care if the tin is empty or nearly empty • And worse still, passive investors who don’t even know about sardines 12
Ranger Fund is about eating sardines
Trans Tasman Fund is about relative performance
None of these great companies are in Ranger • • • Ryman Healthcare A2 Milk Company Contact Energy • • • Auckland Airport TrustPower Kiwi Property Group • • • Mainfreight Port of Tauranga Restaurant Brands • • • Fisher & Paykel Ebos Infratil • • • Meridian Energy Goodman Property Chorus • • • Mercury Vector Spark • • • Freightways Precinct Properties Fonterra 15
Not many eating sardines in these tins 16
How can you go wrong owning the world’s best? • • • Coca Cola IBM Dow Chemical • • • McDonalds Rite Aid General Electric • • • Walt Disney Hewlett Packard Phillip Morris • • • Baxter Labs Doctor Pepper Gillette • • • Johnson & Johnson Tropicana Halliburton • • • Kmart Marriott Pfizer • • • Black & Decker Sony PepsiCo • • • Schlumberger Wal Mart Procter & Gamble • • • Eli Lilly Merck Anheuser-Busch • American Express 17
The Coca-Cola Company • In the early 1970 ’s Coca-Cola was going global 18
The Coca Cola Company • And investors were thrilled by that, PE rose to 50x 19
The Trading Sardine Company • But the music stopped, and suddenly valuation really mattered 20
The Coca-Cola Company • It took 20 years for those that bought in 1973 to get a decent return 21
Summary • Investors care about what’s in the tin • Lots of sardines compound nicely over time • Traders and speculators just want to sell the tin • Essentially relying on finding the greater fool • Unfortunately sometimes they are that greater fool • Passive investors don’t even know about sardines • Or the concept of a greater fool 22
Email: Stephen.bennie@castlepointfunds.com Mobile: +64 27 675 9995 Phone: +64 9 300 6060 PO Box 105889, Auckland 1143 www.castlepointfunds.com
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