Article

25 Nov 2024

Ramsay Investors Push For Shake-Up Of ‘Failed’ Overseas Expansion

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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Article

Quality in M&A crosshairs

Mid Cap Quality Fund Portfolio Manager, Tim Riordan shares his M&A observations of high quality companies and the material demand for high quality assets across sectors.

Key highlights across the portfolio:

  • Quality assets bid – the consistent underlying bid for quality assets is impressive, if quality assets trade too cheaply they won’t last long in their current form. This somewhat underwrites valuations for true quality assets.
  • Buy v build – post the recent inflationary years, whether assets are trading cheap or rich, it is now cheaper to buy v build in many cases
  • Breadth of demand – perhaps the most interesting has been to see demand right across the spectrum of sectors and asset types – ag infrastructure, technology, financials and commodities, cyclicals & defensives, growth & value.

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Article

29 Oct 2024

In Banking, Boring Matters

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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Article

Four Founder-Led Companies Worth Watching

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.

Please click here to read more:

Fund Updates

Lessons Learned – Be Wary of Narratives

At Blackwattle Investment Partners, we believe in sharing the stories behind our mistakes because these lessons drive both personal and professional growth.

Rather than shy away from mistakes, we embrace them as learning opportunities.

Here’s a story from our Portfolio Manager, Ray David, highlighting the common disconnect between a management team’s narrative and their actual financial results.

Ray delves into the tools we use to cut through narratives and assess the true financial strength of a company.

Key takeaways from this experience:
1. Be Wary of Narratives
2. Focus on Financials
3. Stay True to Process: Doubt can lead to investing mistakes.

Investment Strategy

27 Sep 2024

Lessons Learned: Question Everything

​​​​At Blackwattle Investment Partners, we believe in sharing the stories behind our mistakes because these lessons drive both personal and professional growth.

Rather than shy away from mistakes, we embrace them as learning opportunities.

Episode 3 Digging Deeper: RCR Tomlinson

Here’s a story from our Managing Director Michael Skinner and one of the key investment mistakes that he made during his own career.

In 2018, Michael made an investment mistake that left a lasting impact on how he approaches decision-making in markets. He invested in RCR Tomlinson, a mining services company with a history spanning 120 years.

Despite constant reassurances from management and the Board, a miscalculation in their solar energy projects led to their ultimate downfall.

The company underestimated rock hardness, leading to massive cost overruns and an emergency need for capital. Almost a month later, that capital was gone, and so was the company.

Key takeaways from this experience:

  1. Question Everything: Management teams make mistakes. It’s important to dig deeper and never assume that surface-level information is enough.
  2. Challenge Assumptions: No matter how uncomfortable, challenging what you hear ensures that you fully understand the situation, especially in complex industries.
  3. Transparency is Key: Businesses must be open about their challenges. When issues are hidden, it’s a red flag.

As investors, we need to demand transparency.

This lesson is foundational to Blackwattle’s approach today. We relentlessly pursue quality in businesses, but we also know the importance of asking tough questions and constantly improving our investment processes.

Fund Updates

17 Sep 2024

Small Cap Long-Short Quality Fund Webinar

Hear directly from our Small Cap Long-Short Quality Fund Portfolio Managers Dan Broeren and Robert Hawkesford providing a performance update following reporting season, key market insights and current portfolio positioning.
 

Fund Updates

16 Sep 2024

Message from the CIO: Personal Trading

At Blackwattle Investment Partners, we continuously strive to do better for our clients, which is why we have implemented a no-personal-trading policy across our business.

Personal trading by fund managers isn’t just a conflict of interest – it’s a distraction that can compromise trust, decision-making, and ultimately client returns.

We understand that not everyone will agree with our stance, and that’s okay.

Our focus is on raising our own standards, because we believe that by doing so, we can enhance trust and deliver better outcomes for our clients.

We do hope that this may promote greater transparency and improved integrity across the entire industry.

Click below to hear directly from our CIO Michael Skinner

Article

11 Sep 2024

Personal Trading by Fund Managers – A Conflict and Distraction

We started Blackwattle Investment Partners in an attempt to elevate Funds Management for our clients, investors, staff, and our communities.

But it’s not just about us – our entire industry can, and should, do better.

Too many fund managers have drifted away from their core fiduciary responsibility to their clients.

One glaring issue stands out: Personal Trading (‘PA Trading’) by fund managers.

PA Trading is an undeniable conflict of interest, and serves as a significant distraction.

It compromises the integrity of the investment management industry and can ultimately harm investment returns.

It is clearly not aligned with a client’s best interest.

The solution is: Eliminate it. Ban it. Abolish it.

An Industry Call to Action

The funds management industry must acknowledge the inherent risks, conflicts, and the distraction posed by Personal Trading.

By eliminating this practice, we can build trust and better align ourselves with the best interests of our clients.

At Blackwattle, we have already implemented a strict no-personal-trading policy, reinforcing our commitment to always act in our clients’ best interests.

In fact, we have committed over $15,000,000 of our own personal capital, alongside our clients, into the Blackwattle Funds.

We call on regulators, industry bodies, and fellow fund managers to join us in banning the practice of PA Trading.

Setting high ethical standards is our responsibility.

To Our Clients

Whether you’re a large superannuation fund, or an individual investor, we encourage you to demand accountability.

Personal trading has no place in fund management.

Together, let’s push the industry to put the clients’ interest first.

Letter to industry click here
AFR Article click here

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