Pinnacle Investment Management will establish an offshore distribution capability following the addition to its line-up of the latest high-profile boutique, Jacob Mitchell’s Antipodes Partners, a global equities and Asian equities manager based in Sydney.
Mitchell started his new business last week, with six colleagues and about $200 million under management, inherited, thanks to Pinnacle, through its takeover last year of some international trusts run by Perennial Investment Partners.
Andrew Findlay, a Pinnacle director, said that it was “on the agenda” to establish overseas distribution, not just for Antipodes but also for its other affiliates. Pinnacle was also looking closely at the evolution of the retail market, with technology making this a lot cheaper to reach. Pinnacle currently has nine business development managers, overseeing relationships for its $15 billion in funds under management.
From Antipodes’ point of view, the institutional market will be the initial focus, notwithstanding Mitchell’s pedigree with his former employer, Platinum Asset Management. Platinum has had most success in the retail sector, partly it is thought, because of the manager’s resistance to institutional fee levels.
Mitchell left Platinum on November last year after 14 years with the firm. He was manager of 15 per cent of the global portfolio, its Japan portfolio and was deputy CIO. He had previously been Platinum’s US analyst.
Mitchell started his career at the former Tyndall (now Nikko), which was a 1980s high flyer, known as Clayton Robard, that came unstuck after the 1987 crash. It was reborn as Tyndall with a new value process developed by Peter Pedley, who became Mitchell’s mentor.
“Peter used to emphasis how important it was to understand a company,” Mitchell said. “You had to study whether its history was relevant and whether there were exogenous factors at work. Tyndall was also one of the first high-conviction managers in Australia. We used to invest in ‘units’ of 4 per cent. So we invested either one or two units [4 or 8 per cent] in a stock.”
Antipodes will also be a high-conviction manager, with the global portfolio having around 50 stocks. Mitchell says, though, that there is a difference between ‘high conviction’ and ‘concentrated’. “You can have a 100-stock portfolio which is very concentrated because of high correlations. We would rather go deeper than broader [in the investment universe].
Mitchell says the style is value orientated, predominantly long-only but with a degree of shorting. The long-only component would be “classic contrarian”.
In fact, the name ‘Antipodes’ implies the style. ‘Antipodes’ is a term which describes a body which is diametrically opposed to another body on the opposite side of a sphere, such as the globe. Amazingly, less than 5 per cent of world’s land mass has an antipodes.
Mitchell is looking to add some further analysts to his team and is putting a lot of emphasis on developing the right culture to foster talent. Pinnacle owns 22.5 per cent and the staff own the rest of Antipodes. Pinnacle provides backoffice services and RE as well as distribution.
* Greg Bright is publisher of Investor Strategy News (Australia)