Eli Greenblat - Young Guns on the Sharemarket: Meet Australias New Generation of Money Makers

Contents

First published in 2007 by

John Wiley & Sons Australia, Ltd

42 McDougall Street, Milton Qld 4064

Office also in Melbourne

Typeset in Berkeley LT 10.5pt/14pt

Eli Greenblat 2007

The moral rights of the author have been asserted

National Library of Australia Cataloguing-in-Publication data:

Greenblat, Eli.

Young Guns on the Sharemarket.

Includes index.

ISBN 9780731406814

1. Stocks Australia. 2. Investments Australia.

3. Investment advisors Australia

4. Stock exchanges Australia. I. Title.

332.6780994

All rights reserved. Except as permitted under the Australian Copyright Act 1968 (for example, a fair dealing for the purposes of study, research, criticism or review), no part of this book may be reproduced, stored in a retrieval system, communicated or transmitted in any form or by any means without prior written permission. All inquiries should be made to the publisher at the address above.

Cover image Getty Images/Stone/Tobi Corney

Cover design by Brad Maxwell

Wiley bicentennial logo: Richard J Pacifico

Disclaimer

The material in this publication is of the nature of general comment only, and does not represent professional advice. It is not intended to provide specific guidance for particular circumstances and it should not be relied on as the basis for any decision to take action or not take action on any matter which it covers. Readers should obtain professional advice where appropriate, before making any such decision. To the maximum extent permitted by law, the author and publisher disclaim all responsibility and liability to any person, arising directly or indirectly from any person taking or not taking action based upon the information in this publication.

Acknowledgements

Although only one name appears on the front cover of this book, there was an army of hard-working and dedicated people involved in putting it together. A second division of troops provided never-ending encouragement and support to me during the writing process.

Firstly, I owe a great deal of thanks to the funds managers who agreed to be interviewed for this book. They gave freely of their time to sit down with me and explain the inner workings of their investment strategies. They made themselves available to me whenever I needed to ask follow-up questions, go over previous conversations or read through drafts. These professionals trusted me with their most important asset their reputation.

A special vote of thanks to Geoff Wilson from Wilson Asset Management, who not only provided the foreword for the book but also helped convince some of the funds managers to come on board. Roger Montgomery was also an enthusiastic champion of the book from day one, introducing me to his colleagues to widen my network of interview subjects.

James Kirby, editor of the Eureka Report, was the first person I disclosed the idea of Young Guns to and he became an important link in the chain in getting the book published. He provided some very kind words in the form of a testimony and some sage advice on the pitfalls and rewards of being a published author. James also introduced me to the team at John Wiley & Sons Australia, the members of which I would also like to thank for their hard work and enthusiasm.

Finally, I am very grateful to my family, friends and workmates. My wife Talia and daughter Abigail were a tireless cheer-squad, and gave me plenty of time-out to work on the book. My parents, in-laws and sister-in-law provided constant support, as did my friends.

Foreword

Intelligent investors are always hungry for information. One can never stop learning about the sharemarket, which has the ability to humble even the most successful investors. Young Guns on the Sharemarket is an informative selection of strategies, methods and tips on becoming a better investor.

Eli Greenblat has made use of his exceptional journalistic talent to present us with the collected wisdom of thirteen young Australian funds managers. His ability to simplify complex financial concepts is one of his many skills. Eli explains the fascinating and varied investment techniques of his interviewees, removing the mystique that surrounds these often elusive professionals.

Young Guns on the Sharemarket is essential reading for anyone who invests in the stock market, regardless of his or her level of experience. Elis enthusiasm and dedication is evident on every page.

Ive enjoyed this book and Im sure you will too.

Geoff Wilson

Chairman, Wilson Asset Management

Author, Masters of the Market

Preface

There is no better way to learn about investing in the sharemarket than from the professional investors who spend their working lives analysing, researching and valuing companies.

As a journalist for The Australian Financial Review, I speak to funds managers, stockbrokers and analysts every day. These are highly trained, intelligent and passionate people who invest hundreds of millions dollars on behalf of their clients. They work for some of the largest funds management and superannuation companies in the country, as well as a growing number of boutique firms that look after the money of wealthy individuals and families.

The boutique funds management businesses featured in this book are some of the most successful in the industry. Because of the small size of these boutique firms, these managers can be more nimble than those who work for the larger firms when it comes to taking and selling positions. Many of these investors once worked for the larger asset management companies but have since developed their own strategies best suited to the flexibility of boutique firms.

Other professional investors featured in this book have worked for stockbroking firms, banks or superannuation companies. What they have in common is a passion for the market and a strong belief that their investment strategies and processes will deliver the best long-term gains for their clients.

Most investors never get to meet let alone chat with the funds managers who ultimately watch over their investments or superannuation. The only exposure they have is seeing funds managers interviewed on television or in the newspaper. In both circumstances investors never really get a full and well-rounded insight into the managers investment styles.

Young Guns on the Sharemarket is the answer to that predicament. This is not a get-rich-quick book, nor is it a simple biography of professional investors. Its an in-depth look at proven investment strategies as implemented by our young guns every day.

Another feature the funds managers in Young Guns on the Sharemarket have in common is their age. This book focuses on investors aged in their 30s, the young guns of their generation. But this doesnt mean they lack experience. Despite being under 40 years of age, our young guns have witnessed an impressive number of booms and busts, including the 1987 stock market crash, the subsequent property crash, the dotcom boom (and its collapse), the mining and resources boom and the current bull market.

They are young but they are not risk-takers; they are experienced but they havent closed themselves off to new ideas. They have developed some of the most innovative investment strategies in the market.

I chose these thirteen managers because they each have distinctive styles. In this book you will read about funds managers from the world of biotechnology, others who focus on small-cap companies and those who prefer investing in the leading stocks on the exchange. Some take contrarian positions to the markets judgement, others ride with the momentum. There is also a private investor who will give you a glimpse into an entrepreneurs approach to investing.