Weekly Thoughts 13 June 2014

The important thing from due diligence visits like the one I have just made overseas, is for me to take note of anything I was not comfortable with, the things I need to respond to or maybe where I need to execute changes. The positive things I can forget, because that would be why I was comfortable with the particular company in the first place. Here are a variety of points from my visits, not necessarily good or bad, just points. Subtle fund changes that I want to make for clients following this visit, I will execute as and when.

The Investec meeting was very good. I spent an hour and a half with a great guy. We chatted about my international fund choice at the moment and into the future. I challenged their performance differential to the index – I said it wasn’t good enough. I said their fund fees should come down by 0.44%. I could see he knew I had a small point here, although I don’t expect Investec to listen to little me. He was not happy with my lack of support back home and said it wasn’t supposed to happen and that he would look into it. He took me for a walk through their offices, past the fund managers and their dealing desks – which is where the trading on the stock markets happens regarding the companies the funds will own. It was a good visit. Positive.

Sarasin have their offices facing right onto St Paul’s Cathedral. Here I also chatted through their fund’s performances and had a walk around and a meet and greet with their fund managers.

At Orbis I chatted about their new Global Balanced Fund that has recently been launched and asked questions around the ownership succession of the business. The business is owned by the Gray family themselves and the ownership is busy being transferred to a family foundation. I asked them to get back to me on certain issues around succession and management of the Foundation if and when Allan and his son William are not around. I could not have a tour of the trading and fund management areas as this sits in Bermuda, where Allan and William live.

I visited Marriott’s international fund managers on the Isle of Man. I had some time with the fund managers themselves who also do the dealing. One chap took me through a stock selection process – what they look for and how they dig for a long dividend history before buying a company. He showed me how they set up their buys and sells for execution. We looked at some companies live on their systems. He said at one point, ‘chose a stock, let’s look through one.’ I chose Tesco, the UK supermarket chain. It was interesting. We covered business ownership and succession as well. Also a very good visit.

The trip was valuable and beneficial from a business point of view. To ask questions closer to the coal-face, to establish some relationships. Worthwhile. I might well do it again in the years to come.