Joanne Tran from the Australian Financial Review discusses Technology investment in Australia with Tim Riordan and our Mid Cap Quality Team who share their own insights noted below:

Blackwattle Investment Partners portfolio manager Tim Riordan owns Xero and Life360 among other technology stocks in his mid-caps fund and has been overweight the sector.

The money manager cited robust financial metrics as one of the reasons for the strong momentum behind ASX-listed technology businesses. Other reasons include the poor performance of Australia’s mining sector which has prompted investors to look elsewhere for returns.

“They continue to present as very attractive and strong business models,” Mr Riordan said. “They’ve got multiple operational levers available to them to achieve their growth outcomes. It’s a really attractive dynamic.”

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Thanks to the Australian Financial Review for a well-written article exploring Founder Lead Companies.

A snippet of the article is provided below:

“We keep referring back to Sydney fund manager Blackwattle Investment Partners’ founder index – an equal-weighted portfolio of 50 founder-led companies on the ASX – to show just how good these companies have been for Australian investors.

Blackwattle’s founder [index] outperformed the ASX300 by 18 per cent a year in the decade to October 2024 – that’s huge performance. The founder-led stocks included Goodman Group, Fortescue, WiseTech, Block/Square and ResMed.

Why the outperformance? Long-term thinking, higher investment in innovation, risk tolerance and strategic decision-making and alignment, Blackwattle said. That all sounds reasonable to us.”

Thanks to Ray David, Joseph Koh and David Meehan for the insights and analysis.

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Our Portfolio Manager and Partner Ray David providing his insights to the Australian Financial Review discussing Ramsay Health Care.

Blackwattle Investment Partners portfolio manager Ray David said Ramsay’s problem was “a misallocation of capital that just hasn’t worked much like other failed Australian companies that went offshore”.

“We think the company needs a radical restructure,” Mr David said. “The share price tells you it needs to be done sooner rather than later, there is so much latent value there.

“While there have been management and board changes and the reality is execution needs to gather more pace, as industry conditions remain challenging, and the balance sheet is weak”.

Mr David’s steps to fix Ramsay include restructuring Sante via a demerger or partial sale, improving returns in its Australian hospitals business by stopping capital programs and negotiating harder with health insurers, merging its UK business with another provider to improve scale and synergies, and an on-market buyback to return cash to shareholders.”

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Our Global Portfolio Manager, Sunny Bangia, discusses in his Livewire article two banking franchises that are of very high quality and have consistently delivered results for decades. ICICI Bank and Capital One Financial—both key holdings of the Blackwattle Global Quality Fund. Both are also known for being “boring,” which, in this case, is a good thing.

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How risky are founder led companies?

It has been an eventful week for certain ASX founder-led companies, as recent revelations exposed significant governance failures, sparking critical questions about board oversight and leadership.

In this note on Livewire Markets, Large Cap Portfolio Manager, Ray David, discusses some of the Governance failures at certain companies, and what makes a successful Founder led company.

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