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Getting to know... Richard Stubbs

This week in Getting to Know we meet fund manager Richard Stubbs from Castlepoint and, amongst other things, find out about his fishing exploits and work.

Friday, May 1st 2015, 10:50AM

Who are you and what do you do?
I am Portfolio Manager and one of the founding partners of Castle Point Funds.  Castle Point is a boutique fund manager that I jointly own with three other founding partners and our financial backers.
We have designed Castle Point based on our firm beliefs of focused investing for the long-term. Throughout my investment career I have considered alignment of interests as a key factor in my investment decisions. We have applied this to Castle Point, where managers invest in the funds alongside clients.
Day-to-day my time is spent analysing companies and managing the portfolios. I particularly enjoy the in-depth research involved in uncovering a new stock investment.

How did you get into the funds management industry?
I wrote my Master’s Degree thesis on long run equity and bond returns in New Zealand and published a couple of academic articles.  A broking firm sponsored my research, which I presented to their clients, one of which (Prudential) ultimately hired me. Since then the funds management industry took me round the world and eventually back to New Zealand, with a couple of interludes.

Castle Point's monthly fact sheets are light on performance commentary. Why is that?
The monthly fact sheets detail our holdings, the new or exited stocks, and performance figures. As you rightly note, what we don't do is spend a lot of time commenting on it.
We have done this on purpose.  Our investment focus is long-term and it is our firm belief that monthly performance of any equity fund can be almost fully attributed to investor sentiment or market noise rather than long-term fundamentals.  We don’t therefore presume to draw links between the fickle and easily spooked or excited stock market and what this means for the long-term value of our investments.

What the team does every quarter is write a commentary with more general think pieces, which are available on our website. Indeed we have written in more depth on this very subject in our April commentary.
The monthly fact sheets detail our holdings, the new or exited stocks, and performance figures. As you rightly note, what we don't do is spend a lot of time commenting on it.

I guess you were in the running to win AMP Capital's New Zealand's mandate, how good would it have been to win that?
AMP is a highly respected institution and it would have been great to have them as a client.  We hope to have AMP as a client at some point in the future.  In the mean time we remain focused on generating long term returns for our current clients, both with our current Ranger Fund and some exciting new products we plan to talk more about soon.

If there is one thing you would like to change about the funds management industry, what would it be? 
Its preoccupation with short term earnings.  This is actually destructive to the economy as a whole.  A 2004 survey written by Graham, Harvey, and Rajgopal of over 400 executives of US listed companies found that 78% of executives would forgo value-creating activities in order to smooth earnings, and 55% would avoid 'a very positive NPV project' if it meant falling short of the current quarter's consensus earnings.   We love finding and supporting firms that are happy to buck this trend and create long term value.

What’s the best advice you have ever received?
Less is more.  The longer I've worked in the industry the more I've found this to be relevant. In the modern world of active investment management there is no shortage of information, the analogy of trying to drink from a fire hydrant is often quoted. Whilst knowing everything there is to know about a subject is an admirable target, in practice I believe it is better to identify what is important. Spending one's time thoroughly understanding two or three important factors is more worthwhile than trying to know a little about everything.  Activity is often used to disguise ignorance.

Outside of work what do you do? 
I have a young family so most of my time outside of work is enjoyed with them.  I also squeeze in some saxophone quartet practice and a bit of fishing on the sea kayak.

Can you tell me about that fish in the photo?
During summer I would kayak to to work in the city from Devonport I ended up catching two snapper. One on the way to work and one on the way home. They were pretty good fish at 34cm and 40cm long.

What's your favourite television programme?
I don't watch a lot of TV, the best TV I have watched recently was the Cricket World Cup semi-finals.

What’s one thing people may be surprised to know about you?
Having at different times lived in Peru and France, I can speak Spanish and French. Although, my children, being fully fluent, might disagree with me about my ability to speak French.

If you weren’t in this job what would you be doing? 
It’s difficult to think of something as interesting and challenging as what I'm currently doing. When I leave Castle Point I hope it will be in a wheel chair in the very distant future.   If I wasn’t working I would likely be blue water sailing with the family.

Tags: Getting to Know

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