‘Anyone can read reports’: TAMIM’s Ron Shamgar on why management matters
Technical Investing managing director of investing Craig Scheef is a 30-year industry veteran who combines thematic investing with technical analysis to manage his portfolios.
TAMIM Asset Management’s Ron Shamgar says his unusual path from entrepreneur to fund manager has given him a new level of insight into what makes businesses tick.
Before becoming a fund manager, Mr Shamgar formed and led numerous businesses in a range of industries, including furnished accommodation, fashion retail, and even pet insurance.
“I guess that gave me a lot of experience in how businesses work and what to look out for, and I think that’s helped me in my investment journey,” Mr Shamgar told Reach Markets ahead of his presentation for the fortnightly The Insider: Meet the Fund Manager series this Friday.
Mr Shamgar has been an active investor for 18 years, and has been managing funds since 2013 when he and a partner launched TBF Investment Management – where he ran the company’s small cap value growth fund until 2018.
Now leading the TAMIM Australia All Cap and Small Cap Income strategies, Mr Shamgar said he still believes getting to know a business’ managers and understanding what skills and attributes they will need to make their company a success is crucial when choosing where to invest.
“Anyone can read financial reports that are out there, so the real key in the smaller end of the market is the people running the businesses – because the businesses are not yet at a mature stage where it doesn’t matter who runs them,” he said.
“I need entrepreneurial management teams, and people who are trustworthy and can really execute a vision for a company that’s growing.”
Doing your research
In addition to a promising management team, Mr Shamgar said he likes to invest in businesses which have “predictable” revenue – companies which ideally have recurring and contracted revenue streams.
Mr Shamgar also looks for businesses which are already profitable and generating free cash flow, and which won’t require a great deal of capital expenditure in order to grow.
While Mr Shamgar said it’s important to check the company’s books, he added that he’s not put off by debt “as long as the debt is manageable”.
“We then try to estimate what this business will look like in a couple of years from now in terms of revenue and earnings, and then we try to attribute a valuation to it,” he said.
“We use a few methodologies we use, but when it comes to valuation I have a saying that ‘I’d rather be approximately right than precisely wrong’ – I don’t think it really matters whether a business is worth $1 or $1.20 when I’m buying it at 50 cents.”
Some fund managers, Mr Shamgar said, can place too much emphasis on this type of intrinsic modelling trying to predict what a business will be earning in the future.
Mr Shamgar will be joining us for ‘The Insider: Meet the Fund Manager’ on Friday 13th of August at 12 pm (AEST) where he will discuss his 3 favourite stocks, his approach to identifying solid investment opportunities in undervalued companies and his views on using fundamental factors to delineate the good companies from the bad. This will be followed by an interactive Q&A. Book here.
‘The Insider: Meet the Fund Manager’ is a free webcast series which gives you direct access to prominent fund managers. This session is live and interactive and includes a live Q&A. Spots are limited, so please book into this session as soon as possible.
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