Thank you for the invite
@lost,
I’d like to touch on culture, which I believe is crucial to a business where people are the largest asset (and expense) of a funds management business.
I truly believe the culture has changed at magellan, evident by how they handled the CEO exit, blatant lies from the CIO about lack of performance criticism from institutions and brushing off AGM questions regarding flows.
From Magellan's Annual report 2021, pg.7 “We are pleased our voluntary employee share purchase plan has resulted in approximately 81% of employees being Magellan shareholders” This is actually a good thing, however when the share price has halved and is likely to continue to fall at least in the short term, it can’t be good for employee morale.
It also shocked me when posters on the magellan board brushed off the CEO exit because he wasn’t a portfolio manager it somehow won’t matter.Quoting the same annual report“Dr Cairns is also integral to a number of strategic projects that if successful, could create significant shareholder value.” pg.34He represented magellan’s sole seat on Barrenjoey’s board, was very involved with futurepay and looked after their magellan capital partners segment.
The magellan posters obviously are turning a blind eye to the problems. I think they don’t want to admit that the business is not what it used to be.
I’d like to contrast this with GQG’s culture.
During the covid selloff in March 2020 GQG took some significant steps to align employees and ensure they focused remained on the clients, not have to worry about their job security.From Tim Carver in an interview(https://www.institutionalassetmanager.co.uk/2021/01/06/294073/hold-your-views-hold-them-lightly-fast-growing-gqg-partners-art-devils-advocacy)
“When the pandemic hit in April, we advanced all of our employees’ year-end bonuses, to be paid at the end of April, and we told everybody, nobody's bonus will go down from the prior year. We also said, nobody's going to get laid off this year,” says Carver.They also handed out a USD10,000 grant to each employee, that was invested in its global equity strategy, which they would receive in five years’ time.
“We wanted to take all the financial risk off the table for them personally, so that they could focus on clients as the hyper-focus, being very competitive and serving our clients better than anybody else,” says Carver.
“The way to do that is by taking care of your employees so they can take care of the clients.”
I think its also worth mentioning their unique culture of devils advocacy. Two or three analysts are assigned to examine each idea in a portfolio, with one assigned to build the positive case for investing, while the other plays the ‘devil’s advocate’.From an interview with Rajiv Jain“There is also a built-in check and balance system, whereby every name we cover has two people doing the research. The second analyst on the name has a default “short” position and is only held accountable for it if they also like the name. We also have an investigative journalist on staff whose full-time job is to find faults with the names we’re looking at. Lastly, we’ve added a forensic accountant to the team to have an additional layer of review on the accounting side.”(https://www.gsam.com/content/dam/gsam/pdfs/us/en/fund-resources/other-reporting/gs-gqg-partners-international-opportunities-interview.pdf?sa=n&rd=n)
It must be a great feeling working at GQG with advisors and institutions giving you more and more money to manage essentially backing your judgement, which would be positive for employee morale plus the fact they now all own GQG shares means they can participate in the firms success as well.The decision to sell magellan and buy GQG was based on by mis-trust of management, change in flows and the opportunity cost of not owning GQG which I believe will perform better than Magellan over time.
Thanks for taking the time to read my posts I hope I can add some value here.
Cheers, Plague.
