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The ‘uncomfortable’ secret to Collins St Asset Management’s impressive returns

February 2, 2022

The ‘uncomfortable’ secret to Collins St Asset Management’s impressive returns

Australian investors netted themselves returns of 20.4% on average last year, helped along by a strong rally that saw the ASX 200 lift 13%.

Australian investors netted themselves returns of 20.4% on average last year, helped along by a strong rally that saw the ASX 200 lift 13%.

That’s a strong return, but still shy of the impressive 25.57% delivered by Collins St Asset Management’s Value Fund for the year after fees – something managing director Michael Goldberg attributes to the ‘information advantage’ he and his team look for when investing.

Looking for more information than most people might normally have access to isn’t new for Mr Goldberg. Speaking to Reach Markets, he said this approach is one he has sought to implement ever since his first visit to a brokerage at 14 years old.

“My first personal purchase of shares was NAB when I was around 14. I didn’t quite know what to do with the information that I was building up in the back of my mind, but it struck me that this broker knew more about the prospects of NAB than the general public,” he said. 

Mr Goldberg theorised that this additional insight could be parlayed into generating better returns, and 30 years later he confirmed this hypothesis and refined it down into a strategy – one he says is easy enough to use, but which many investors find difficult to implement.

Before taking a stake in a business, he likes to do a deep dive into its workings, often making phone calls and surprise visits and asking tough questions to learn as much as he can about that company.

From this, Mr Goldberg looks to find businesses trading at a discount to their intrinsic value, businesses that are performing well despite markets not recognising their performance.

Though this is relatively straightforward, the portfolio manager said many investors struggle with this pavement-pounding approach because it is often awkward and tense to approach businesses like this unexpectedly.

“It’s uncomfortable to turn up to stores unannounced, running the risk of embarrassing yourself or being thrown out of a store – which has happened on an occasion or two,” he said.

“It’s weird to call people up out of the blue and ask them how their business is going. It’s strange to convince half your family to please try out this hair regrowth shampoo because we want to see if it works.

“These are all weird and wonderful things that we do to try to get that information advantage.”

Many of the businesses Mr Goldberg buys are ones that have recently undergone a restructure or fixed an inherent problem that previously weighed on the company’s valuation, and he looks to take a stake before the market realises what the business is really worth. 

This strategy gives the added confidence that the business being added to the portfolio is already performing well, removing the more speculative component of picking companies based on how they might perform in the years ahead.

Although this may seem complicated, Mr Goldberg said this approach is relatively simple, even prudent, and likened it to purchasing a whole business rather than just shares.

“If you were going to buy a business outright, you would do all this research before you buy it and we think it’s appropriate to do that same research if you’re buying a share of that business,” he said.

To watch the session with Michael Goldberg, click here.

Join our next session of The Insider: Meet the Fund Manager to hear from Martin Pretty next Friday, 11th February, at 12pm (AEDT). 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, 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

Sources


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