Regular readers of Livewire will know Matthew Kidman from his role as ‘Anchorman’ for the popular Buy Hold Sell video series, and for expertly moderating panel sessions at the annual Livewire Live investor event.
Matthew is also a highly accomplished investor with an impressive track record, and following 13 years at Wilson Asset Management, he established his own firm, Centennial Asset Management (VIEW LINK).
A common request we receive at Livewire is to hear Matthew’s views on investing and markets. Today, we’re delighted to bring you an in-depth discussion covering Matthew’s investment philosophy, his current views on equity markets, two small-cap ideas that meet his criteria, one investment lesson that keeps coming back to bite him, and plenty more...
“I’m not necessarily believing we’re in for a bear market, we might be, and I haven’t ruled that out. We’re definitely in for a change of what is going to lead the markets.”
- Meeting Geoff Wilson and the decision to switch from journalism to a career in funds management.
- Matthew’s process for portfolio construction and his checklist for selecting stocks.
- The relationship between geopolitics and markets... why do we get it so wrong, so often?
- Aussie banks are looking ‘fit’ following the Royal Commission.
- The outlook for equities and why he thinks a change of leadership is taking place.
- Two small-cap ideas that fit into the process at Centennial Asset Management.
- A lesson learned the hard way.
If, as I have, you appreciate Matthew's contribution to Livewire, I encourage you to like, share or leave a comment below this post. Thanks in advance.
Podcast - Listen to the the full and uncut interview
Tune in on Apple iTunes: (VIEW LINK)
Listen via SoundCloud: (VIEW LINK)
Really interesting and honest
An interesting point raised by Kidman in the interview is the question as to why Australian equities have underperformed against those of other regions over the past decade or so. I have a suspicion that this underperformance might possibly be related to the high rate of annual net overseas migration in Australia over the past 12 years: the rapid population growth has pushed up property prices and rents in the major cities, and as a result, most people have had less money free for investing in shares.
Loved the honesty Matt. Great interview boys!
Patrick - There is over $ 2 Trillion in Super savings in OZ so there is no shortage of money to invest in the market. The key reason is probably to be found in the dearth of high tech stocks in the OZ market. We have no equivalent of the FAANG's and so a large part of our index is dominated by 4 Banks / 3 Resource Co's / 2 Retailers. These are not high growth and resources are cyclical. The one big exciting stock we have is CSL. So in summary we are a bit of a boring market compared with the S&P 500
I agree Tim, the fact that a dozen or so 'dinosaur' stocks dominate the local sharemarket is undoubtedly part of the problem as well. Given that most of these companies have poor growth prospects it wouldn't be surprising if their share of the pie starts shrinking over the next few years, and you would hope that eventually this should lead to improved returns for the local market.
Great questions,honest answers. The highlight for me was Kidman's admission of the effect of fund manager's ego on their returns. Thank you
Patrick F - interesting point. Personally I wonder whether it's to do with high payout ratios on Australian shares (in part, due to franking credits) reducing the amount that's reinvested in companies earnings good returns on capital. Either that, or more simply due to the heavy concentration in the index and the poor performance of those industries that we're over-weight as a nation.
That last 5 minutes is pure gold, really great insight into the human psychology, being right versus generating a return.
I admire Matthew Kidman greatly. Watch Buy, Hold, Sell always. Eric Wells
Great Interview. Candid and honest. Takes some of the myth about fund managers.