Portfolio Talk: Carmel Fisher
Carmel Fisher has recently established a boutique funds management business with her husband. Here she talks about her investment philosophy and what her top stocks are.
Saturday, September 19th 1998, 12:00AM
Probably best known, still, for the Prudential Emerging Companies Trust, Carmel Fisher hasn’t exactly been sitting on her hands in the meantime. After four and a half years in Auckland working for Sovereign (managing the Sovereign Select Equities Fund among other things), she took maternity leave late last year and "started thinking about what I wanted to be and where I wanted to go".
The result: she and her husband bought an old villa in Devonport (from which they now work) and launched a new company. Oh, and had the baby.
There’s little time left for outside interests, but Carmel says family have high priority. As for living and working in Devonport: "it’s so far removed from Lambton Quay or Queen Street, but I’m putting in just as much time... it’s great to be doing just one thing again, so I can really focus."
What exactly is Fisher Funds Management?
We offer one unit trust (the Fisher Funds New Zealand Growth Fund) and invest in New Zealand shares. End of story.
While I was at Sovereign, I became quite generalised because I was not only into New Zealand shares but also looking after an investment team.
I felt there was room for a niche player in the market. The existing players were all getting bigger and better and all becoming similar. As for passive funds, I felt that at some stage their popularity would start to wane and there was a niche for a good actively managed fund.
It took eight months to get this fund off the ground - almost as long as having a baby! It was set up on August 10, with an independent board of directors. My husband Hugh is a director and handles all the administration, client service and so on, so I can concentrate on investment.
Over time, I would like to develop another investment person. But I still believe that, in running a share portfolio, the final decision is always made by one person. There’s always a key decision-maker.
Who are your clients?
My main client to start with is Sovereign. I’ve also targeted selected financial planners round the country, as well as the investing public. I have $18 million under management at the moment, and I would like to have $50 million in a year’s time - but who knows. When we launched the Prudential Emerging Companies Fund, it grew to $80 million in the first 12 months. But at the moment, there are outflows from equity funds in general and New Zealand equity funds in particular.
Can you tell me about your investment philosophy?
I’m looking for companies whose earnings are expected to grow at a faster pace than the market. I’ve restricted myself to not (selecting from) the top 10. I honestly believe that I can’t add a lot of value in researching the top 10.
I have 13 companies in the fund and there’s a universe of about 160 that I can invest in. At the moment, I’m more in the mid caps mainly because, while the environment is still quite unsettled, I prefer to invest in those companies with quite predictable earnings streams.
So who’s in there?
Met Life Care, which has gone up 30 per cent in eight months. They run retirement and nursing homes, and they’re almost recession-proof. Also Baycorp, which is a resilient company, and there are quite a few retailers, including Michael Hill and The Warehouse. Also some GPG, which is like an extension of me as a fund manager. (Ron Brierley) has made some mistakes, and I have made some in my fund too, but all you need is one or two significant performers that make all the difference.
It is a niche fund, but after a while, I think its performance will speak for itself.
I know it’s going to be volatile, but since August 10 I’ve outperformed my benchmark (the NZSE 40) by 14 per cent.
What are some of the top stocks right now, in your opinion?
All the stocks in my fund are really my picks. If I add a new stock, then that means I have to sell one of the existing ones.
I have a policy that I won’t sell unless my fundamental reason for buying in has changed. It’s a good discipline.
It could have been tempting to sell some Michael Hill stock as it’s made good gains in the last three months. But I’m looking at long-term growth, I’m not in the market every day and not ‘active’ in the terms that most people think.
What has been your strategy in the current market?
Simply buying into stocks according to my target, buying on weakness and if the share price rallies significantly then I’ll take some profit. With the volatility, there have been some great opportunities to buy.
It’s almost irrelevant what Wall Street does. Met Life is still feeding its old people, Baycorp is still collecting debts. You have got to look at the market as a market of companies, not as a market of stocks. It’s not a frivolous exercise.
What should investors be doing?
I personally believe there are some similarities in the cycle with 1991-92, and it could be the time where equity markets bottom out, especially for small to medium sized companies, where all the bad news is built in to the prices already. However the top 10 are more vulnerable to any dent in confidence globally, as they’re effectively international stocks.
You can read Philip's blog here: http://www.goodreturns.co.nz/blog/
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