AFR
Rob Luciano’s penetrable fortress
Michael RoddanNational correspondent
Jul 7, 2022 – 5.14pm
“I won’t be on the board. I won’t be having any management role,” VGI Partners executive chairman Robert Luciano told Chanticleer in March, as the once-darling hedge fund sold itself via reverse takeover to Phil King’s Regal Funds Management.
“I’ll be purely focused on money management, so that’s a very substantial improvement for me,” Luciano added.
VGI Partners’ Rob Luciano. James Brickwood
It’d also be a substantial improvement for unitholders, given the negative 28 per cent return (based on NTA and dividends) of the VGI global strategy over the last 12 months. The MSCI World Total Return Index (AUD), by the by, has declined 4.8 per cent. VGI’s Asian funds strategy was down 20 per cent.
From inception, listed vehicles VG1 and VG8 have returned 0.9 per cent and negative 2 per cent per annum, respectively, a mockery of VGI’s stated 10-15 per cent return target.
Like other doyens of Australia’s stock-picking aristocracy, Luciano has largely deferred any commitment to picking stocks, increasing the allocation to cash in VGI’s global strategy from 11 per cent to 54 per cent over the last year. Not even Hamish Douglass stuffs that much cash under the mattress!
But the miserable performance has been no obstacle to feathering Luciano’s nest, siphoning close to $100 million out of the company during its lifetime.
Shareholders, meanwhile, are being rushed to the laughing academy, nursing total returns of negative 36 per cent over the last year. Is it any wonder why funds under management cratered from $3.2 billion in March 2021 to $2 billion within 12 months.
At VGI’s May 27 AGM, just days before its shotgun wedding with Regal, activist investor David Kingston gave an entirely unflattering assessment of Luciano’s tenure.
An airport-style security gate at VGI’s Sydney office.
“We gather here today to celebrate the death of VGI as controlled by Rob Luciano,” Kingston eulogised. “Dead, buried and cremated. We don’t celebrate death often, but the death of the listed VGI is welcome. I’m shouting everyone French champagne.”
When asked if his resignation would ultimately be required to account for VGI funds’ woeful performance, Luciano responded: “I’m not resigning as an executive of VGI.”
Thankfully, King appears to be making this decision for him. On June 27, Luciano was removed as portfolio manager of the VGI Asian investment fund and replaced by King himself.
Like any completely well-adjusted hedge fund manager, Luciano spent considerable effort at VGI erecting a paranoid security apparatus – for himself. This included travelling with elite soldiers as bodyguards, installing a so-called “panic room” in his office, and even an airport-style swipe gate inside the door of VGI’s modest Phillip St premises.
VGI Partners’ website hosted some unusual advice for people seeking automatically written essays.
Luciano’s idiosyncrasies even extended to ensuring the Wi-Fi be turned off on the whole floor of any hotel room in which he stayed. Headaches, apparently. Not unlike Chuck McGill, the brother from Better Call Saul, who claimed to suffer from the entirely real malady of electromagnetic hypersensitivity.
Luciano told The Australian in January: “Certainly since I started at VGI, I haven’t had anybody who is my peer working with me.” How could we ever disagree with that!
Given the lengths taken to insulate VGI from foes, it must be strange the VGI website was seemingly hacked on June 29, with an unusual post appearing under its “insights” section titled: How Can Someone Help Me Write My Essay?
Here, VGI investors were entreated to a lengthy missive on a range of robotic cheat tools such as Write My Essay For Me, EssayBot, PapersOwl, EssaysWriting and PapersWriting.com.
The offending post was taken down on Wednesday, which means the latest filing on the “insights” page is, once again, a 16 December 2021 article spruiking three VGI-held stocks: Chicago Mercantile Exchange, Qualtrics and Mercari.
Since its publication, these shares are down 9 per cent, 58 per cent, and 66 per cent respectively.
King has made a successful career at Regal recognising the difference between an asset and a liability. It’s becoming clear what side of the balance sheet Luciano is sitting on.
Michael Roddan is a Walkley Award-winning national correspondent based in Sydney. He is a former business and economics reporter for The Australian. Connect with Michael on Twitter. Email Michael at m.roddan@copyright link
(20min delay)