In the lead up to this week’s The Insider: Meet the Fund Manager, Gregg Taylor from Salter Brothers sat down with Reach Markets to provide a bit of information about his investment strategy, industries of interest and view on the market.

Mr. Taylor, a CFA Charterholder, is focusing on defensive growth in “industries that have got really strong structural tailwinds which are less reliant on the broader economy and the underlying consumer”. He takes a bottom up approach to the portfolio, and is specifically hunting companies with strong balance sheets. He’s identified a clear trend of reduced market demand for growth that is tied to the consumer. Mr. Taylor believes that appetite for loss making companies without a clear path to profitability will continue to be limited, especially when there is any sign of weakness in their balance sheet.

Salter Brothers take exposure in both the private and public markets, and it’s on the private side that Gregg has seen significant opportunities. “They were a little bit later than the listed markets to reset valuations and expectations but its been pretty brutal once they have”. He notes a lot of investors who wouldn’t typically invest in private markets came in during the 2020-2022 period, and have fled pretty dramatically over the past 6 months – most likely to not be seen for a while after a some disastrous outcomes.

Private companies demand for capital now outweighs supply, which has allowed valuations to readjust comfortably lower than their listed peers. In December, he pounced at the opportunity to invest $5 million in IP Solutions – a company that sells payment and data security solutions to blue chip clients such as Mastercard, HCF Insurance, Vocus Communications and Latitude Financial Services. The business has been around for 12 years, but after attracting some Pre-IPO money early last year while the market was hot – a subsequent significant valuation reset gave Gregg an enticing entry point. He has now joined their board as a non-executive director.

On the topic of IPO’s – of which Mr. Taylor has a wealth of experience after taking almost 20 companies through from private to public life – he believes that while there will be exceptions, it will be a tough market for new listings in 2023. Referencing the so called ‘IPO window’, he states that “one thing is the window opens and closes pretty quickly”. The Investment Director notes that the larger listings, such as the upcoming Virgin Australia IPO, serve as really important barometers to gauge what type of support and aftermarket is available.

Gregg is not just another tech guy, and tries to avoid classifying companies as tech or non-tech businesses. “The vast majority of businesses these days are technology enabled. We’re more focused on businesses with deep intellectual property that allows them to have a structural advantage over the market, pricing power and scalable growth”. Identifying disruptive opportunities in the health industry and civil infrastructure space has been a particular focus as of late. 

Mr. Taylor is a seasoned operator after 25 years in the markets. He got his start as an analyst and then a broker on the sell-side before moving to the buy-side at Schroders where he spent five years. He then went on to co-found Bombora Investment Management, where he was Chief Investment Officer of the funds management group. He has spent the majority of the last 15 years specifically analysing small caps, and has only seen the risk/reward proposition this positive twice or three times during that time period.

Join Salter Brothers’ Gregg Taylor this Friday 17th February at 12pm (AEDT), on our The Insider: Meet the Manager webcast to hear him talk about his favourite stocks, investment strategy, market insights and more. There will also be an opportunity to ask questions during the session. To book yourself in, or request the replay, click here.

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