Hot off the back of last week’s The Insider: Meet the Fund Manager session with Martin Pretty, Co-Founder and Investment Manager of Equitable Investors, the fund manager sat down with Reach Markets to provide a bit of information about his investment strategy, background and view on the market.

Equitable Investors conducts research on uncovered microcaps, with a unique crossover strategy that combines below the radar listed and proprietary unlisted companies. They also take a hands-on approach to engaging with their investee companies in order to maximise value.

Mr. Pretty has seen a great deal over his 23 years in financial markets. Taking many lessons from the dot com bubble and GFC – especially how crucial capable management is in steering a company through economic turmoil and the opportunities this can present – the fund manager  built a backbone in research which proved valuable in funds management.

He identified the differential gap between large and small caps that has grown over the past 12 months, as the cost and availability of capital led to small caps taking a beating, while the market pricing in interest rates cuts before the end of the year is supporting potentially inflated valuations. He specifically highlighted small cap liquidity in his latest monthly report to investors, nothing that the ASX Emergencing Companies Index (ASX: XEC) suffered a 37% drop in liquidity during the March quarter, compared to the same period for the previous year. 

Mr. Pretty views IPOs as the purest indicator of supply and demand in equity markets. If there is demand, investment bankers, brokers and entrepreneurs have every incentive to generate new listings. There have been only nine IPOs on the ASX so far in 2023 – six of which have been losers. The median return of IPOs the occurred over the last 12 months was -17%, and during the same time period – there were only 14 non-resources new listings.

The art of asking great questions is a skill that Mr. Pretty acquired during his time as a journalist for the Australian Financial Review in the early 2000’s, where he was able to meet fund managers, cover numerous different sectors including infrastructure, utilities and building materials, as well as writing the Street Talk column.

After an extensive 6 years at Bell Potter across various research roles including an equities analyst, head of research and institutional analyst for emerging companies, Mr. Pretty then built a research department and coverage universe from the ground up at Investorfirst Securities (now known as HUB24), with this same department being acquired by Wilson HTM Investment Group in 2013. 

The prominent Thorney Opportunities Fund (ASX: TOP) was a perfect fit for seasoned operator,  and he spent a few crucial years there as an investment manager, during which time the fund produced an 18.2% p.a. NTA-based return over ~3 years from launch.

To cap off his 360 degree view of financial markets, Mr. Pretty has also garnered significant experience from his directorships in various businesses. He is currently a director of three ASX-listed entities. Mr. Pretty’s investment strategy is characterised by a bottom up approach with a high level of constructive engagement with his investee companies. 

Click here to watch the highlights or the full replay of Martin Pretty’s Meet the Fund Manager session; or click here to be booked into the next session, featuring Triple 8 Capital’s Roscoe Widdup.

Past performance is not a reliable indicator of future performance.