“They are cheap relative to their global counterparts, but we see little positive catalyst,” wrote stock analyst Michael Cyprys.
In research published in May by Morningstar, analyst Shaun Ler said that while he expected GQG to gain inflows and gain popularity with investors due to the slippage in performance of household names such as Magellan and Platinum, he was always limited by the abandonment of active funds. management.
“Like all dedicated boutique managers, GQG intends to create shareholder value primarily by picking the right stocks in its managed investments,” he said. “We welcome management’s focus on investment, but unfortunately this is insufficient to help GQG build a sustainable competitive advantage over its peers.
“The balance of power is shifting from asset managers to end clients, who today have no shortage of fund managers to hire, are more intolerant of underperformance and demand lower fees.”
But Anders remains optimistic. He sees real value in fund management and says GQG outperformed its peers, bucking the industry trend, to report $2.8 billion in quarterly inflows in June.
He attributes some of that to GQG’s investment style. He will never rule out investing in certain industries such as fossil fuels and energy.
“I know ESG [environmental, social and governance] is a big thing, globally. And that’s part of our process. But we’re not going to say we’ll never invest in that sector or that industry… If a manager says I’ll never buy that space, we think you’re doing a disservice to customers,” he says.
“We integrate ESG into our process. But you also have to be realistic that there are things that are needed for the transition to renewable energy.
Much of GQG’s success has been attributed to co-founder Rajiv Jain, whose high profile has raised concerns among some investors about what would happen if he were to leave.
Anders says that Jain is a majority shareholder of GQG, and unless something unexpected happened to him, he wasn’t leaving the company. He also points to his own recent promotion, alongside two others, to portfolio managers last month.
“[Jain] still maintains the risk of veto, he can still act unilaterally if he needs to, but there are four of us as a group instead of just saying him,” he says.
“We have a wide range of investment professionals and this is not a one-man show.”
In the coming months, Anders says he has his eye on energy and healthcare companies, and he’s turning to tech again after GQG pulled out of the sector ahead of a broader rout in which tech stocks fall.
Anders said valuations for tech companies are becoming more reasonable and prices will come down significantly. There is also the potential for managers who have had success with technology to become forced sellers of certain stocks.
“If they have a bunch of private equity investments, they won’t be able to sell them, so they’ll put them aside and sell what they can. A lot of that is big tech,” he said.
“So we’re aware and watching, putting them on buy lists, sharpening the pencil on spaces where, if we see opportunities where valuations are not just there, but cheap, take advantage of that opportunity.”
A good manager should be prepared to say they’re wrong, he says, pointing to Snapchat, which GQG owned before the tech giant released a stormy Q3 2021 earnings update.
“We got our fundamental work wrong, we sold the stock, we completely sold it at, say, $5,” he said, noting that other large holders were convinced that the price of the action would rise again. Snapchat is now trading at $9.67.
“Managers who aren’t willing to admit they’re wrong is no way to have longevity in the company.”
GQG Partners will publish its half-year results on August 11.
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