Focus on fundamentals

STAR MANAGERS SPECIAL

Prime Value Asset Management

Prime Value Emerging Opportunities Fund

Richard Ivers (portfolio manager), Mike Younger (portfolio manager)

A strong focus on solid returns and predictable earnings while not taking too much risk is what, according to Richard Ivers, a portfolio manager at Prime Value Emerging Opportunities Fund, has helped to earn the Financial Newswire’s Star Manager recognition.

The fund, which is run by Ivers and another co-portfolio manager, Mike Younger, aims to invest in listed companies outside the 100 largest on the Australian Stock Exchange (ASX) while providing “a large range of quality companies and less competition from other investors”. The investment philosophy of the fund encourages investors to view the fund rather as an investment of high-quality companies, than an investment in “the market”.

Ivers said the fund was biased towards small caps industrials but did not invest in mining companies, the fact that acted as a headwind over the last few years when during the mining stocks had done better than industrials.

“We are not trying to pick what is hot at the moment, but tend to focus more on what is the business with predictable earnings which you can forecast over the next few years.

“And if you can do that and you have been through the cycles, spoke to their competitors, customers and suppliers and really understand a business you will get a fair idea where the stock price would be [in some time], because you can put a multiple on their earnings, and you will have an idea what their returns would be, so there is a fundamental reasoning behind of how we think about investing.”

“We don’t look at the benchmarks either, we just look at what is the best risk-adjusted return potential for a business and invest on that basis.”

Ivers also said that what really matters in this industry in order to be a successful portfolio manager is the humility and ‘not being taken away by emotions’, when it comes to the hot sectors like tech stocks last year or energy stocks this year.

“We chose to stay away from that and focus on fundamentals.”

When asked what piece of advice he would offer to someone just beginning his journey in the industry, Ivers said: “I think you to be passionate. This industry can pay really well and there might be a perception of it that it is all exciting but it’s a lot of hard learning and can be stressful at times. You don’t have to be the smartest person in the room but you need to be passionate about it and have a concept of risk and return.”