Meet Ivan: All he needs is three good stocks and a handful of fundies
Ivan from South Australia has had an on-again, off-again relationship with the share market. After getting burnt as a teenager during the 1969-1970 nickel boom, the avid golfer, surfer and artist manager took an extended break and only got back in the saddle in 2005. What stands out is the way he did it.
“My appetite for risk is high and when I re-entered the share market after a 32-year hiatus, I invested profits from the sale of two houses into one stock,” Ivan says.
After realising the all-your-eggs-in-one-basket approach can make your heart skip if the thesis goes wrong, Ivan worked on his addiction to concentration risk by investing in quality managed funds. His portfolio now takes a “manage the manager” approach alongside a portfolio of three stocks that pass his own process.
I first met Ivan back in 2018 when he flew to Sydney to attend a Livewire investor event. His commitment to research was clear, and as you'll read, competitive instincts run through his veins. But as I am learning about our readers, Ivan's true motivation is to be in a position to help those close to him and those less fortunate.
I hope you enjoy Ivan's story.
Livewire Investor Profile
Employment status: Self-employed
Years investing: 16 years (after re-entering the market in 2005)
Investment goals: To achieve financial security and undertake education philanthropy
Products used: Equities, exchange-traded funds and managed funds
Biggest portfolio holding: Fiducian Group (ASX:FID)
Image: Ivan surfing at Max's left in the Telo Islands
How old are you and how long have you been investing?
I’m 64 years old and have been investing on and off since I was 14.
My father, a textile merchant and dress manufacturer, opened an account for my brother and I through a local broker. We would trade shares based on tips from my father's business accountant.
Everything was working out until my brother bought Tasminex during the Nickel boom in 1970 at $50. It crashed to $2 shortly after.
The broking accounts were closed, and my brother mowed lawns for the next five years to cover the loss that I presume my father settled with the broker. I took a 32-year break after that experience and started investing again in 2005.
(Editor’s note: Tasminex’s shares rocketed from $3 to $96 in 1970 before crashing. The company has since delisted.)
What do you do for work?
I choose to work as opposed to having to work. I manage two music artists who perform nationally and I manage residential and commercial properties that I have an interest in.
What is your objective from investing?
I aim to create wealth and have choices. By that I mean not being restricted financially so that I can help family and friends, travel, assist children with a house deposit and so on.
How would you describe your investing style?
My appetite for risk is high. When I re-entered the share market after a 32-year hiatus, I invested profits from the sale of two houses into one stock.
I’m also very competitive and investing is a very complex game, not unlike chess. I find that very alluring.
What products do you use to execute your strategy?
Here's a breakdown of my portfolio:
- International global growth fund: 3%
- Direct shares: 22%
- Australian funds: 34%
- Commercial property: 24%
- Residential property: 17%
How would you describe your strategy?
For funds, I take a manage-the-manager approach. I am constantly researching fund managers – listening to podcasts and webinars of the managers I use and potential new managers. The funds I’m invested in are:
- Hyperion Global Growth (ASX:HYGG)
- QVG Opportunities Fund
- 1851 Capital
- Maven Smaller Companies Fund
- REQON Broadcap Fund
- Altor Alpha Fund
Can you explain how your strategy has changed over time?
I made a commitment to alter my strategy over the last couple of years as my investment style from the outset was allocating large amounts of capital to one or two stocks. This is my investing DNA.
I believe everyone has an innate risk profile and if you want to change you need to work hard on it.
I have come to appreciate my style is very risky and I’ve worked to adjust to a less risky approach now that I have built capital.
Another point is that the legal structure in which you house your investments is extremely important. The earlier you get the setup right, the better.
I remember reading DIY Super for Dummies by Trish Power and could not believe what I was reading so I read it three times in a row. I have spent many hours understanding self-managed super fund (SMSF) legislation and family trusts.
Could you please share your top five holdings and tell me a bit about why you hold each of these positions?
The following five investments comprise 85% of my exposure to shares.
1. Fiducian Group: 28%
I hold Fiducian Group Limited (ASX:FID) for a number of reasons. First, it is one of the best-managed companies on the ASX, under the guidance of Executive Chairman Indy Singh. It has an impressive track record of capital growth and increasing fully franked dividends every year.
The holding size is also a legacy of my concentrated investment style that I’m comfortable with. While this is my biggest stock, I also have positions in two others: Mach7 Technologies (ASX:M7T) and Element 25 (ASX:E25).
2. 1851 Capital Emerging Companies Fund: 18%
I have followed Chris Stott for a number of years and was pretty excited when he announced he was going to set up his own fund. His experience and track record speaks for itself.
3. Maven Smaller Companies Fund: 15%
I met Matt Joass at the 2019 Coffee Microcaps Conference. His style is probably the closest to what I aspire to be that I will most likely never achieve – finding great companies with SAAS (software as a service)-style recurring international earnings. I listened to every podcast of Three Wise Monkeys with Claude Walker and Andrew Page before investing.
4. QVG Capital Opportunities Fund: 15%
A friend of mine, Russell Muldoon, recommended I consider QVG when I first began my strategy to allocate capital to managed funds. It was the first fund I invested in and once again, the track record of Principals Chris Prunty and Tony Waters speaks for itself.
5. REQON Broadcap Fund: 9%
REQON Broadcap Fund is a small fund run by my friend Russell Muldoon. I have very high regard for Russell’s ability to manage money. The performance to date has been very impressive.
What has been the standout performer from an income perspective?
I would have to say Fiducian has been very impressive. Not only has it produced increasing dividends (see graph below) but the franking credits within a tax-friendly environment of an SMSF has helped offset distributed capital gains from my managed funds.
I have held Fiducian for more than eight years and have bought more shares in the company every year.
SOURCE: FIDUCIAN FY21 RESULTS
Could you tell me about your worst investment?
It would have to be CBL Insurance Limited – it was a complete disaster! I have joined a legal claim against the company following its collapse. It was a sobering experience and after the destruction of capital, I decided to review my strategy.
As the size of my very concentrated portfolio grew, I felt I should be more diversified to spread my risk.
However, my comfort zone is to own two or three stocks, not 10, and my due diligence on CBL was lacking. The solution was the manage-the-managers approach that I had not considered before.
How does Livewire help with your investing process?
I am constantly assessing fund managers to get a feel for their style. The videos and podcasts Livewire does are very valuable in that regard.
Of course, returns are important – you could just look at past returns of a managed fund and invest on that basis – but I prefer to do an extensive assessment of the individual until I’m very comfortable investing my money with them.
Do you have a favourite contributor you recommend other investors follow?
It’s hard to pick a favourite, but I do like the following managers:
- Chris Stott for his sharp, logical and clear thinking.
- Michael Frazis for his originality.
- Hamish Douglass an exceptional individual, very entertaining and makes you think.
What can Livewire do better or what do you dislike about Livewire?
I think Livewire has evolved now to a point where it's quite hard to see what they could do better. I think everyone is looking forward to a “live” Livewire event where we can meet in person again.
Is there a lesson you’ve learned as an investor that might help others?
That’s a question that could take me a few pages to answer! But in short:
- It’s critical to know what your investor DNA is so you can hone and develop your own style.
- Be curious, humble and absorb information from people you regard as more experienced and better investors than yourself.
- Back yourself on the big calls – doing nothing is the easy path.
- You only need to find two great stocks a year.
Can you share a personal passion or ambition you have for your future?
I would like to get my golf handicap to single figures but that’s unlikely.
In all seriousness, we’ve supported a number of families in Bali through educational scholarships for many years. I am passionate to develop and extend that.
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