13 Questions for Antipodes’ Alison Savas

Describe
Your
Investment
Strategy

Our
philosophy
is
‘pragmatic
value’.
We
seek
out
companies
that
are
mispriced
relative
to
their
business
resilience
and
growth
profile,
and
we
will
look
across
the
spectrum
of
growth
to
find
these
opportunities.
If
you
buy
weak
businesses
just
because
they
are
cheap,
or
if
you
sacrifice
margin
of
safety
to
own
momentum,
you
risk
capital
destruction.

What
are
the
Biggest
Investment
Opportunities
in
2024?

The
forgotten
490!
We’re
at
multi
decade
high
levels
of
market
concentration
and
narrow
performance.
History
shows
this
doesn’t
persist,
and
we’ve
started
to
see
some
rotation.
This
can
continue
as
quality
stocks
globally
are
priced
at
all
time
high
relative
valuations
and
approaching
dot.com
bubble
extremes
in
the
US.
The
valuation
of
quality
relative
to
value
is
also
at
extreme
levels.
Look
for
opportunities
beyond
the
mega-caps
where
some
of
the
earnings
streams
aren’t
attractively
priced.
While
the
market
is
focussing
on
Nvidia
(NVDA)
we’re
finding
AI
beneficiaries
on
mid-high
teens
multiples
such
as
TSMC
(2330),
Qualcomm
(QCOM),
Oracle
(ORCL).
There
are
also
cyclicals
that
have
meaningfully
de-rated
with
the
weakness
in
the
industrial
production
cycle.
Some
have
resilient
supply/demand
dynamics
yet
remain
priced
for
recession
–
notably
European-listed
global
multinationals.

The
consensus
“sell
China”
is
also
a
unique
valuation
opportunity.
At
8x
earnings,
China
is
priced
at
a
30%
discount
to
trend
valuations.
The
macro
risks
are
well
known
but
there’s
been
a
greater
shift
towards
supporting
activity
and
the
equity
market.

What
are
the
Biggest
Risks
to
the
Current
Bull
Market?

US
equities
are
priced
like
an
oasis
of
prosperity
compared
to
the
rest
of
the
world.
The
US
economy
has
been
relatively
insensitive
to
an
aggressive
rate
hiking
cycle,
the
consumer
has
been
propelled
by
excess
savings
accumulated
from
Covid-19
stimulus,
and
we’re
on
the
cusp
of
an
AI/climate
driven
investment
boom.
But
cracks
are
starting
to
form.
Excess
savings
are
on
the
verge
of
depletion
and
personal
consumption
(70%
of
GDP)
is
losing
steam.
The
policy
lag
of
higher
rates
is
beginning
to
cascade
through
credit
and
the
manufacturing
sector
outside
of
high-tech
industries
remains
weak.
The
risk
is
the
US
market
is
over-pricing
the
probability
of
a
soft
landing
and
under-pricing
a
higher
for
longer
rate
environment
which
could
induce
a
harder
landing.

Who
is
the
Most
Inspiring
Person
You’ve
Worked
With
and
Why?

The
first
portfolio
manager
I
worked
for
taught
me
to
not
assume
profitability
and
valuations
always
mean
revert.
Understand
the
competitive
environment,
and
implications
for
a
company’s
financial
performance.

What,
if
Any,
Investments
Would
Fit
Into
the
‘Buy
and
Hold
Forever’
Category?

We’ve
owned
Microsoft
(MSFT)
for
the
last
9
years
as
it
has
evolved
from
incumbent
to
disruptor.
It’s
an
extremely
resilient
platform
business
with
the
advantage
of
scale
and
networking
effects.
They
use
their
formidable
balance
sheet
for
R&D,
capex
and
M&A
with
the
ability
to
launch
new
products
into
a
very
large,
sticky
client
base
creating
a
wide
economic
moat.
Today,
5%
of
the
world’s
GDP
is
spent
on
tech,
and
the
bulk
of
this
spend
is
still
on
premise.
Microsoft
is
in
the
box
seat
to
benefit
from
these
structural
growth
trends
–
the
duration
of
its
growth
profile
is
long,
with
a
relatively
high
degree
of
confidence.
Whether
or
not
it
can
be
held
forever
ultimately
comes
down
to
whether
the
valuation
remains
attractive
relative
to
the
earnings
stream.

What
Would
You
Never
Invest
in? 

A
weak
business
just
because
it’s
cheap.
This
can
miss
structural
change
–
the
stock
is
cheap
for
a
reason.

How
Worried
Should
Active
Managers
Be
About
the
Future?

If
we
focus
on
our
goal
of
delivering
returns
in
excess
of
the
benchmark
through
the
cycle
with
lower
levels
of
risk,
and
to
invest
with
a
capital
preservation
mindset,
we
will
have
a
solid
business
for
years
to
come.
Active
management
also
has
an
important
role
to
achieve
better
ESG
outcomes
through
active
ownership
and
engagement.

What
Unpopular
Investment
Opinions
Do
You
Have?

Private
equity-backed
businesses
can
be
exposed
in
a
higher
for
longer
rate
environment.
PE-backed
companies
comprise
36%
of
outstanding
leveraged
and
high
yield
loans,
a
market
worth
approximately
$2.7
trillion.
Most
of
this
debt
is
floating
rate
and
unhedged.
The
servicing
cost
is
now
10%,
from
4%
in
2021,
with
median
interest
consuming
43%
of
EBITDA.
The
linkages
to
the
real
economy
are
very
real.
PE-backed
firms
alone
account
for
around
10%
of
the
US
workforce.
If
flows
into
private
equity
–
or
private
credit
–
slow,
and/or
the
economy
slows,
the
vulnerability
of
the
underlying
borrowers
will
be
revealed.

Has
Crypto’s
Resilience
Surprised
You?
And
Will
We
See
a
Crypto
ETF
in
the
UK?

Yes,
it
has.
Despite
market
volatility,
regulatory
challenges,
exchange
blow-ups
and
scepticism
from
mainstream
financial
institutions,
crypto
has
shown
a
remarkable
ability
to
bounce
back.
As
for
a
crypto
ETF
in
the
UK
–
anything
is
possible!

Does
Asset
Management
Have
a
Role
in
Promoting
Social
Mobility?

It’s
critical
people
from
all
walks
of
life
have
access
to
high
quality
asset
management
either
through
pension
funds
or
personal
savings
–
big
or
small.
The
ability
to
grow
and
protect
capital
over
the
long
term
can
have
extraordinary
impacts
on
lives.
The
industry
has
a
role
via
providing
products
that
enable
a
broader
set
of
investors
access
to
active
strategies
and
promoting
investor
education.

Have
you
Ever
Engaged
with
a
Company
and
Been
Particularly
Pleased
(or
Disappointed)
by
the
Outcome?

We
engaged
with
Newcrest
Mining.
Despite
industry
leading
asset
life,
cash
costs
and
production
growth
potential,
Newcrest
failed
to
generate
significant
shareholder
value
and
was
priced
at
a
discount
to
peers.
Share
repurchases
to
demonstrate
the
mis-valuation,
instead
of
unexpected
equity
funded
M&A,
could
have
made
the
value
case
more
apparent.
This
valuation
discrepancy
was
ultimately
noticed
by
Newmont,
which
acquired
Newcrest.

What’s
the
Best
Bit
of
Advice
You’ve
Ever
Been
Given,
Personal
and
Professional?

Don’t
be
the
last
to
arrive
at
the
party
–
all
the
fun
has
already
been
had
(personal
and
professional!).

What
Does
Your
Life
Outside
of
Fund
Management
Look
Like?

As
a
relative
new-arriver
in
London,
weekends
are
spent
exploring
all
this
wonderful
city
has
to
offer
from
the
beautiful
parks,
to
art
and
culture,
and
world
class
sport.

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