Fund Manager Q&A

Jun Bei Liu has a passion for learning. Born and raised in China she learnt how to speak English and moved to Australia to complete her tertiary education at UNSW. After 14 years with the firm, Jun Bei took over portfolio management duties of Tribeca's Alpha Plus Fund in April this year. 

Jun Bei, along with seven other fund managers, will be presenting her #1 stock idea at the upcoming Future Generation Investment Forum. Livewire is proud to support Future Generation and the innovative way that it provides sustainable funding to charities doing important work in our community.

This is the second in a series of three interviews that we're publishing ahead of the event. Here, Jun Bei explains the questions she asks herself when assessing a prospective investment, highlights a retailer that stands out from the competition, identifies one of the highest quality management teams on the ASX and divulges a talent she has recently acquired.


Image: Jun Bei Liu, Portfolio Manager, Tribeca Investment Partners

Can you remember the first share you bought?

The first share I bought was called Strathfield Car Radio. It was an old school car accessory retailer trying to branch out into the consumer space. It was listed around the same time as JB Hi-Fi first listed and I bought it thinking it would be a cheaper alternative to JB Hi-Fi, but it didn’t work. 

However, I did learn a valuable lesson from this, a lesson which is particularly important in the retail sector: do your homework

It is essential to see the shops and get a real feel for the business. Investors must understand the business model and the management quality which will drive the success within that company.

How do you describe the way you invest and who or what has had the biggest influence on your approach?

As I have already touched upon, it is vital to take the time to understand the business model before investing. Equally important is to understand where that business sits within its sector. Some questions I ask myself before investing are: why does this business exist? What’s the value proposition to its customers and are they sustainable?

The next important element of investing is to recognise one's own biases and learn from mistakes. The equity market is a noisy place where lots of information is constantly influencing share price movements. We need to consistently and rationally reassess opportunities whenever presented with new information.

You learned to speak English when you moved from China to Australia (well done)! Has there been a time where you’ve been able to use your native tongue to gain an insight that helped with your investing?

Thank you and absolutely! China is a very large trading partner with Australia, and this is growing even further beyond the mining industry as China is now the world’s largest consumer market which represent great investment opportunities. We travel to China regularly to tour companies and understand the regulatory environment there and, during these visits, I use my native tongue in meetings. 

This is advantageous in many aspects, but particularly, I feel that it allows trust to be established from the outset. Moreover, and this is especially true of Chinese, using a translator risks losing certain nuances of speech and, therefore, being bilingual has absolutely helped me to gain an insight as an investor.

We’re coming into Christmas which is an important time for consumer facing businesses. What are your expectations? 

With three rate cuts so far this year and an improving housing market we could expect to see a better supported Christmas, despite continued softness in consumer confidence data. The Christmas period is a vital month in retail, and we should expect it to be reasonably buoyant, particularly in consumer electronics which are traditionally underpinned by the gifting market during the coming months.

Consumer is a ‘favourite’ sector of yours, could you run me through a stock that you think has a unique position / advantage in a challenging sector?

Premier Investments (ASX:PMV)  is one of my favourites at this point in the discretionary names. The current management team has done an incredible job in turning many of its traditional brands such as Portmans around, and most of the brands have performed well in the current tough market condition. We believe they have set a good base for growth and should show strong leverage once the cycle turns. Smiggle also represents a significant growth opportunity as it rolls out its successful format globally.

We’ve also seen house prices kick along in major cities (Melbourne / Sydney) which sectors or stocks are potential beneficiaries?

Of course, the impact of rising house prices will have both direct and indirect beneficiaries. Firstly, the consumer discretionary sector, notably retail, may see benefit as consumer confidence rise. Also, REA Group (ASX:REA) and Domain (ASX:DHG) are likely to benefit as housing turnover tends to increase in correlation with rising prices. 

Both these companies are highly leveraged with home listing volume and, in fact, both talked to early indicators of improvement at their recent update. Of course, mortgage servicing businesses should also see some benefit as home turnover increases. Lastly, as credit growth picks up, banks will benefit; however, this would be much further down the track.

The latest bank reports appear a bit underwhelming … what is your current view on the sector and do you have a preferred stock?

Overall, the banking sector in Australia will be challenged for the next twelve months. This may be since a large proportion of their earnings come from their interest income. We are currently overweight Westpac given their recent recapitalisation and low analyst expectations. We feel CBA is too expensive at this point in the cycle, despite its higher quality.

We often hear fund managers talk about ‘quality of management’ as a key driver of business success. Could you highlight a CEO / Board that you think is executing particularly well right now? 

Certainly, quality management is vital for business success and IDP Education is a good example of this fact. IDP Education (ASX:IEL) is a listed student placement business which specialises in offering student placements. It delivered a growth strategy which allowed it to branch out from being an Australia centric organisation to a global business. At the management level, this required a combination of vision and strategy at the early investment stage; and determination to see this through. The management demonstrated quality through their decision to invest strategically in systems and people and they proved their successful execution as they excelled.

Outside of investing, what is a passion or unique skill / talent that might surprise people?

I am a high energy and passionate person. I like to travel and experience different cultures and sprinkle the experience with the excitement of skiing and scuba diving. 

One of the other things I love also is to learn new skills, a few years ago I taught myself piano when my daughter started learning and now it is my favourite instrument. I believe in lifelong learning, whether professionally or personally, there is always ways for us to improve, you just need to keep an open mind.

Tribeca is a pro bono fund manager for Future Generation, why did you get involved?

Whenever possible I endeavour to conduct business with a social conscience. Here at Tribeca, we want to make a difference in the world through our business and believe that we can achieve this by offering a pro bono service to companies such as Future Generation. It is my aim to deliver returns which will help to better the lifestyle of these clients. This will offer a sustainable future and it is my honour to be a part of that. 

Hear Jun Bei pitch her #1 stock idea at the Future Generation Investment Forum

The Future Generation Investment Forum is taking place at the Grand Hyatt in Melbourne on the 28th of November 2019. At the event, Jun Bei and seven other fund managers will pitch their #1 stock ideas. Visit the Future Generation website to register for tickets.