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Fund of the week: Forget value. Focus on personalities
By
Contributing editor
Emily Hohler
Dec 12, 2005
Charles Firmin-Didot’s Axa Talents fund is one of a kind, says Phil Davis in the FT.
Instead of concentrating on valuations, it focuses on personalities and, interestingly, it has been “extremely successful”, returning 140% more than world indices over the five years since launch and 107.5% over the past three years.
Firmin-Didot, a Citywire AAA-rated manager who dreamt up the concept on a beach in India, says his experience of entrepreneurs led him to believe that companies with a dominant shareholder, who had a track record of at least ten years, “would always outperform conventionally governed companies”.
Few fund managers would dispute the value of good management; Firmin-Didot merely takes that approach one step further. Many firms, he argues, are too bureaucratic to develop the ideas their staff generate, but when a good entrepreneur is making the big decisions, they act fast, and “95% of the time they are right” over the long term.
The selection process involves looking at the 3,000-odd companies worldwide that have a single shareholder owning 20%-80% of the stock and narrowing them down to the best 1,500. Those with a reasonable free float and little debt make the final cut, and the final 60 to 90 that end up in the portfolio are selected based on their p/e to growth ratio.
Favourite entrepreneurs include Masayoshi Son, CEO of Softbank, whose share price has risen on average 38% a year for the past 25 years, and Vincent Bollore, the corporate raider who controls Havas.
As of 28 October, the fund has been open to UK investors for the first time, thanks to the launch of Axa IM’s Smart fund platform. But they will have to act fast: since April 2004, when Axa IM brought it in-house, the fund has jumped in size to more than €400m. It’ll soon reach capacity at €1bn to €1.5bn.
Contact: 0845-300 3475
Axa Talents fund top six holdings
Name of holding % of assets
Fin De L’Odet Eur 16 9.18%
Cosco Holdings -H- 5.22%
Cendant Corp Com 3.53%
Hyundai Mobis 3.36%
Inter Parfums Inc 3.09%
Immsi SpA 2.63%
Published in Investments
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Emily Hohler
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