Concentrated portfolio of best ideas

STAR MANAGERS SPECIAL

PM Capital

PM Capital Global Companies Fund

John Whelan (co-portfolio manager), Kevin Bertoli (co-portfolio manager)

Being open to discussions with people who have different views and the ability of reflecting on your own mistakes are one of the key features of a successful portfolio manager, according to John Whelan, a co-portfolio manager who runs the PM Capital Global Companies Fund. The performance of fund, which is run together by Whelan and another co-portfolio manager, Kevin Bertoli, has earned its portfolio managers the Financial Newswire Star Manager recognition.

Whelan, who joined PM Capital in 2009 as a credit analyst and became co-portfolio manager of the PM Capital Australian Fund in 2020 and in 2021 became co-portfolio manager of the PM Capital Global Companies Fund, attributed the success to the fact that managers treat their clients like they treat themselves and invest their money alongside their clients’.

“We run the very concentrated portfolio of our best ideas and we don’t overdiversify,” Whelan said.

Speaking on the fund’s investment process, he added: “We start off the valuation and observation in the market and from there we do a lot of in-depth industry analysis and company analysis and we believe that generally the 70%-80% of the market is correctly priced so we focus our efforts on 20-30% that we believe are mispriced.”

He said that one of the common mistakes is that the managers are required to have an opinion on every stock. “We don’t have an opinion on every stock and we try to pick what we believe is structurally mispriced for one reason or another and focus our efforts on [these stocks].”

According to Whelan, another prerequisite for a successful portfolio manager is the ability of speaking to the right people, and in particular being open to those who have different views, as too many portfolio managers focus too much on looking for information that agrees with their own view or thesis, he said.

“For us investing is not about ticking a box and it’s not a one size fits all formula but we do have a certain philosophy. [It’s more] about focusing more on the process not the outcome, obviously outcomes matter because it’s your return, but focusing on our process and analysis [will allow] maximise chances to get good outcomes.”

Asked for the advice for aspiring managers, Whelan admitted that although it was now relatively easy to start investing through different platforms, it was worth remembering that investing is a long-term game.

“We see too many market participants these days too who are just interested in the short term return and short-term volatility and [they] tend to jump around from stock to stock, or run from one fund to another, chasing the next big thing.

“I suppose the statement I would make is [that] one of the benefits of running of our fund is that the majority of our investors have been with us for the long-term and they agree with our process. And for them it’s about growing their long-term wealth.”