In the lead up to this week’s The Insider: Meet the Fund Manager, Andrew Brown from East 72 Holdings Ltd sat down with Reach Markets to provide a bit of information about his investment strategy, industries of interest and view on the market.

Through the East 72 Dynasty Trust, Andrew implements his counter-cyclical investment strategy that focuses on investing in family controlled companies. These conglomerates, that are located all over the world, have what he considers to be a high degree of fiscal responsibility and are strategically driven when engaging in acquisitions and disposals of businesses. There is no room for “growth for the sake of growth” in his portfolio.

Andrew started off his finance career working for the Prudential Insurance Company in London, at a time when they started allocating capital outside of the UK because exchange controls had been relaxed. He took this experience into Australian equities, where wrote research as a banking and insurance analyst for the likes of County NatWest and Barings.

Insurance tends to be a bit of a frightening industry for some investors, but it excited Andrew, and much of the analysis he engaged in back then still forms the backbone of how he goes about delivering into the myriad of operations and complex capital structures of some of the conglomerates he invests in today.

After leaving broking, he went into funds management in the mid-1990’s where he ran many of the smaller unit trusts and managed superannuation trusts for AMP. After a period of high performance, he was head hunted by Rothschild and became their Head of Equities, where he stayed for five and a half years until its merger with Westpac’s funds management business.

Andrew loves investing in family conglomerates with the right attributes, and seeks operations that are extremely disciplined from managers who care about their family’s brand name. They are protective of it, and are ultimately very protective of their wealth, and tend to be counter-cyclical.  

He noted that they don’t usually make expensive acquisitions, whereas shareholder owned companies where management is in control often do, and it’s unfortunately sometimes for non-financial reasons, such as making themselves a market leader. This occurrence has been observed in numerous settings, and is currently playing out in the gold mining sector.

East 72 is sector agnostic, and Andrew does not rule them out from investing in any particular industry, but instead focuses on a few key attributes that he will delve into during the session on Friday. 

His strategy has led him to companies that understand the industries they operate in very well, know when to sell, are frugal on costs but pay their executives handsomely and have a low white collar turnover. They tend to be very stable and consistent, so while they do outperform over the long term, they do not outperform in a bull market. However, in the difficult market we are currently in and might continue to stay in for quite some time, there are many opportunities that Andrew is well-positioned to find. He is hunting for deep value on an intrinsic and relative valuation basis, and has some very interesting companies to present.

Join Andrew Brown this Friday, 13th October at 12pm (AEDT) on our The Insider: Meet the Fund Manager webcast to hear 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, click here.

Reach does not assume responsibility for the accuracy or completeness of any information provided, and the views expressed are not reflective of Reach Markets’ position. Any advice is general advice and does not consider your personal circumstances, you should consider whether it is appropriate for you. The information we are giving you is for educational purposes only. “Investing is about understanding your risk” and every time you invest in the share market there is a risk of loss. 

Past performance is not a reliable indicator of future performance.