The people behind the process
In my ongoing interview series of Montgomery Investment Management staff I talk to Analyst Ben MacNevin, in order to lift the lid and see what makes the people behind the process, the blog posts and the impressive numbers tick.
Profile: Ben MacNevin
What is the best piece of advice you have been given?
“For me, it’s more about the philosophy I live by and that is to maintain unconventional thinking. Pushing boundaries, asking questions and generally seeking improvements in all aspects of my life, be it my diet, exercise, dress code and investment thinking. On the investing front I look to constantly challenge the general consensus and the conventional way of thinking which forces me to be proactive as opposed to reactive when analyzing a business.”
What makes a successful equity investor?
“I believe a successful equity investor needs to intimately know the business. A lot comes down to reducing the unknowns for an investment proposition. If you don’t understand the drivers of a business then how can you know the value of a businesses and therefore how can you allocate capital to such an investment. Successful investors also have a very good understanding of the relevant macro or industry drivers at play around a business. Even if you have done all the work around the financials of a company, if you don’t understand the other drivers at play then significant risks creep into your investment proposition.”
What is the biggest mistake that most investors make?
“Letting emotions get in the way of what is logical. The assumption is that investors are rational and so therefore markets are too, but that’s not the case in my opinion. Investors feel losses more acutely than the joys of profits and what I have observed over time is that investors tend to over-react to bad news and treat temporary bad times as permanent. Since joining Montgomery this one area that I have learnt a lot.”
What has been your best investment?
“I would have to say – Resmed (ASX: RMD). Which was actually the first company I looked at when I came to Montgomery. It’s been a fantastic journey watching this company evolve. It has a lot of characteristics of a great business but it is tied to a product cycle and it is exposed to those macro drivers being healthcare and government spending which will affect the prospects of the business no matter what the profitability has been in the past. The potential for them is very exciting with new geographical markets to enter and new adaptations of their medical technology.”
What worries you most about investing at the moment?
“In the Australian market it would be the fact that we are finding it difficult to find many high quality companies at reasonable prices. There is not much depth in the Australian and NZ markets when we compare it to the wider opportunities in the global space. Generally speaking while there are lots of high quality companies listed on our market, they are all relatively expensive.”
If you weren’t an Analyst, what would you most likely be doing?
“I’d like to be in an executive leadership position, with either a big business or a start up business. Somewhere that I feel I could make a meaningful contribution to the strategy and success of a firm.”
What do you do in your spare time?
“I’m heavily involved in the Sydney branch of Rotaract which is the youth division of Rotary. It is a community organization with a professional focus which seeks to improve the general well being of the community and the world. I’m also going to run the New York marathon in November and visit Cuba while I’m there. When I’m not at Rotaract or training for the marathon I am studying for my Chartered Financial Analyst ® designation.”
What’s your favorite investment quote?
“Avoid the landmines.” That’s a reference we use to describe an event that could have a sudden and dramatic negative impact on your portfolio. If you consider that a negative event is on the horizon, it’s better to minimize your exposure than to hold on and wait to see what transpires because it can take a lot of work to recover from material capital losses.