Institution profile

Heptagon Capital is a private investment firm with $14.4 billion AUM and advice, founded in 2005. The firm partners with a range of asset managers as well as manging funds in-house (including the Future Trends and European Focus Equity Funds) as well as discretionary mandates. The firm has offices in Dubai, London, Malta, Stockholm and Tel-Aviv.

Biography

Alexander Gunz is a Fund Manager at Heptagon Capital, having joined in 2011. His primary responsibility is managing the Heptagon Future Trends strategy. Along with regular thematic articles, Alex also produces the Future Trends blog and writes Heptagon’s monthly View From The Top macro commentary. Alex started his financial career in 1997, holding senior roles at J.P. Morgan and Friedman Billings and Ramsey, after earlier positions at Hoare Govett and Credit Suisse, where he became a top-ranked analyst. Alex has a BA in PPE from the University of Oxford and a Master’s in English Literature from Queen Mary College, University of London.

The heptagon Future Trends Fund can invest globally, what’s the geographic split?
Roughly 80% US today, 20% European by listing. The important caveat here is that where a company is listed means very little. The businesses we invest in are typically global. For example, we’ve owned Novo Nordisk and MasterCard since the inception of the fund. Novo Nordisk is headquartered in Denmark, but they get less than 1% of their revenues from Denmark. (The US and China are their two largest end markets). And MasterCard is listed in the US but operates pretty much in every geography in the world.

Discuss your investment style.
We look for businesses exposed to long term future trends. A trend that will grow in importance regardless of what’s happening to global GDP and where regulation or government intervention, if present, are tailwinds rather than headwinds. Then we look for the best business within that thematic area – pure play businesses, that have dominant market positions, and that market leadership is sustained by some form of competitive advantage or moat. We put a lot of emphasis on innovation and R&D. What is R&D as a percentage of revenues and what businesses are doing to attract and retain the best personnel?

The winning formula, is to identify high quality, sustainably oriented management teams that over allocate to innovation (organically or via judicious M&A) so that innovation drives market leadership. Market leadership drives free cash flow generation, which is the key financial metric for us. And that free cash flow enables continued innovation.

Does the Future Trends Fund mean you are heavily swayed to AI?
This is a multi thematic fund, not an AI fund. We invest in in everything from cloud to wind and fish to chips.

Which screens do you use?
Firstly, this is an Article 8 fund, so we have a very clear set of exclusions (weapons, gambling, alcohol, tobacco, oil, mining, nuclear etc). Renewable and food innovation are themes we are keen on. Xylem is a holding due to its exposure to water and MasterCard, another given its exposure to financial inclusion. These themes naturally align with the UN Sustainable Development Goals.

Secondly, we do not own loss making businesses. In my many years in financial services, I’ve learned that #1 you have to separate hype from reality and #2 only businesses that generate free cash flow will ultimately survive.

Another key differentiator is we only own pure play businesses. So, we’re generally wary of conglomerates.

The other factor is we typically want is a business that is #1 or #2 in its market. (E.g., MasterCard, are clearly #2 in the market after Visa (and MA has massively outperformed Visa in recent years and that’s partly why we own it). Also, only about a quarter of all payments globally by volume are done digitally today so there’s a huge thematic runway ahead.

Do you look at ESG scores when considering investing and which providers do you use?ESG is why it is important to have ongoing engagement with management and we participate actively in proxy voting. To us, sustainability really begins with governance. You want to have management teams you can stare in the eye metaphorically and trust and believe are good stewards of your capital.

MSCI is our external provider but we use it more as a sanity check than a guiding factor. A statistic we are very proud of – as of 30/09/2024, 71% of the fund received either a AAA or a AA rating.

What’s your active share ratio?
Over 95%.

Minimum market cap?
Soft close of $1 billion. The median market cap in our fund is about $50 billion.
There’s quite a broad spectrum from $8 billion to $500 billion. The sweet spot would be $20 to $40 billion – a company that has proven itself but is not necessarily well understood by the investment community.

Average holding period?
Potentially indefinite. Average holding period is 50 months.

Fund performance figures?
As of 30/09/24, the Fund has produced 11.1% annualised returns since inception.
In the last three years, performance has been more challenging as we don’t own the Magnificent Seven.

Can we focus on some of your larger holdings and why you invested?

Qanta Services – we think about second derivatives of AI. AI is hugely demanding of power consumption and therefore you need a robust set of grid infrastructure, not just in the US but elsewhere in the developed world. Most grid infrastructure was built around WWII and was never intended for the amount of data that’s going through it. Compound global warming as a factor and that puts stress on ageing infrastructure, and you simply need to upgrade it. That’s where Quanta Services plays a critical role. The business is strongly positioned because they self-perform almost all of their work. They do not work with third party contractors and therefore have a very strong track record of execution and delivery in terms of product. They have a research and innovation-led culture. They own a number of technical training colleges in the US and subsequently have a much higher than average employee retention rate. Their current backlog is about $30 billion which is an all-time high. It’s not just upgrading existing grid infrastructure and connecting new elements into the grid, but also the sheer amount of new demand that is coming from AI as well.

Palo Alto is one of our largest holdings. We’ve argued consistently that data will have zero value unless you secure it, store it and analyse it. Cyber is a theme we’ve followed for a very long time. In cyber, our contention is you either have to be very small and niche like Darktrace, Avast, Sophos (subject to positive M&A) or you have to have a very strong franchise which PANW has. Palo Alto has been arguably more effective than its peers in terms of pioneering this idea of platformization, creating a one stop shop, from which corporates can buy a large suite of cyber products. Another compelling characteristic is from day one, all of their products have been cloud native, and nearly everything they’ve done has been organic (developed in-house). So back to my point about innovation and innovation culture. When you are integrating new products into your suite, clearly if it’s an in-house product, it’s much easier to integrate. Also, anyone who’s met Nikesh Arora would struggle not to be impressed by him.

Equinix – owned since the fund’s inception. As above, data needs to be stored. Equinix, is arguably the best player with regard to the storage theme. It is a portmanteau for equal Internet exchange and effectively they are the largest carrier neutral data centre player. So, if you are two third parties, Google and Amazon for example, and you’re looking to cross connect your traffic, it makes much more sense to do it in an Equinix data centre than anywhere else. They have basically built the largest network of data centres in the world. What is really compelling about the Equinix story is the percentage of customers that buy in more than one geography. Some stats – 60% of the Fortune 500 buy from Equinix, 76% of their customers are multi regional, 64% take services in all three regions. They have 268 data centres across all six continents today.

Xylem – the amount of water needed to produce just one semiconductor chip is remarkable (1500 gallons) and that’s why a business like Xylem is incredibly relevant. Water is about 1% of global GDP, but the other 99% of global GDP requires water to survive. Water demand is increasing yet water supply is constrained. We like industries where there is a demand/supply imbalance. The world needs to focus on how to improve water supply. Xylem have a leading franchise both in water hardware (pumps and filters), but also water software as well. And every single industry globally is digitizing so having that ability to sell a full suite of water services and then be able to tangibly point out that these water services are saving you (in terms of identifying leaks, recycling water, routing water efficiently) is a demonstrable and sustainable benefit to an end customer.

Do you like to meet management?
Absolutely, it’s an important part of our process. I do between 50 and 100 meetings p.a. We try and meet management once in London and once at their headquarters. Meeting management really helps to bring the equity story to life.

How do you prefer to meet management?
It depends on our knowledge of the business and whether we’re invested.
Physically making the effort to go and see someone at their HQ generally makes them more amenable to sharing information and talking to you.

Any companies that stand out as particularly good at investor relations?
Quanta Services is headquartered in Houston, TX, but once a year they fly their management team to New York and do an investor reception. It’s an informal environment and for 2 – 3 hours you can chat to everyone from the CEO, to head of HR to the manager of their Midwest division.

Why should companies meet you?
Because we are fundamental long term investors, long only and given our thematic approach, we are much more top down than bottom up. So, the discussion topics tend to be quite interesting and thought provoking for all.

Picard Angst (PA) is an independent Swiss financial services provider, established in 2003. Based in Zurich and the UAE, the firm offers different investment solutions and takes on individual asset management mandates with its 40 investment professionals. It runs several investment strategies in the listed and alternative space, including the Food Revolution Fund, different commodity and real estate strategies and two medical technology venture capital funds.

Jann Breitenmoser works as a senior investment manager at PA and is part of the food revolution team. Previously, he worked at Man Group, where he co-managed a thematic investment strategy focused on water and the circular economy. Before that, he worked as portfolio manager at J Safra Sarasin Asset Management, where he managed different impact and sustainable equity strategies. He started his career more than 14 years ago at Akina (formerly Lombard Odier Private Equity), working as a private equity associate.

What is PA’s client base?
We have a broad client base of mainly Swiss and international institutional investors.

What are its assets under management?
We currently manage more than $4 bn in assets under management with continued inflows across both regions and into our various product solutions and services.

What is the Food Revolution Fund’s investment objective?
The global agri-food system is highly inefficient. The yearly food production value amounts to $8 tn, corresponding to around 10 percent of global GDP. In producing this 10 percent, the agri-food sector generates a third of global emissions, occupies half of the planet’s habitable land and consumes more than two thirds of the available fresh water. This makes the agri-food system a source of significant external costs related to environmental and health damages or malnutrition, which are not reflected in the price of food. This market failure results in false incentives and a structural overuse of natural resources.

In recent years we have seen an increasing pressure to internalize and address these external costs. In this structural shift toward a more efficient and sustainable food system, the global food industry, which is dominated by large multinationals, has an important role to play and bears a lot of responsibility. At the same time, this process poses significant challenges for these ‘old food’ companies. The vast majority of them sit on huge historically grown portfolios that are dominated by plastic, sugar, meat and other problematic products, and are facing growing pressure to adjust.

As investors in the food revolution, we leave these old-food companies aside and focus on innovative companies that we consider to be part of the solution. As the winners of tomorrow’s food industry, they should enjoy a significant tailwind in the years to come and offer attractive investment opportunities. These companies can be found in both the large-cap and small-cap space.

What is the fund’s strategy and style?
The fund adopts a fundamental, thematic and style-agnostic investment approach, with a focus on the agri-food industry. We aim to capitalize on major catalysts for change and fundamental trends around the food revolution that evolve independently of the economic cycle and can become a permanent source of capital growth and attract future money flows.

We invest in 40-60 publicly listed equities (using no benchmark) offering exposure to six sub-themes covering the entirety of the agri-food value chain:
• Alternative proteins (such as ADM)
• Sustainable packaging solutions (such as Graphic Packaging)
• Organic, healthy and functional food (such as BellRing Brands)
• New forms of consumption (such as Zebra Technologies)
• Automation and agri-tech (such as GEA Group)
• Food safety and clean label (such as Novonesis)

By focusing on such themes throughout the entire agri-food value chain rather than through sectors, our equity long-only fund is able to invest across all geographies and market capitalizations, thereby offering an undiluted exposure to winners of the food revolution, combined with sufficient diversification. This should help to reach an uncorrelated and differentiated alpha generation relative to more traditional equity benchmarks.

Which screens do you use?
Our investment decisions and portfolio weightings are based on an in-depth bottom-up analysis. For all of our invested companies we conduct a detailed fundamental analysis and calculate an intrinsic value for each company. This is, however, only one aspect of several that we consider in our own proprietary scoring system.

Among other aspects, we assess in detail:
• Competitive landscape and defendable entry barriers (moat)
• Earnings momentum and estimate revisions
• Ability to fund future growth
• Access to and track record of management
• Earnings quality and return on invested capital
• Short and long-term catalysts
• ESG considerations and general profile of each company

How are ESG and sustainability embedded into the investment process?
Our sustainability strategy applies a systematic, modular ESG approach, the PA ESG layer, which is fully integrated into the investment process and part of risk management. This takes into account both exclusion criteria (such as low ESG ratings, controversial weapons, stranded assets or companies involved in serious controversies) and integration of ESG scores to reduce risks and optimize opportunities. On top of the general exclusions mentioned above, we apply an ESG framework specific to the food revolution strategy, including specific inclusion criteria.

Our investment approach is focused on pure-play companies, which we consider to be beneficiaries of the structural shift toward a more sustainable and efficient food industry. Hence, we do not invest into structurally challenged old-food companies. We use a systematic approach to structure the listed agri-food universe into categories, based on the food revolution ‘purity’ of their revenues.

This measures the percentage of revenues a given company is generating along the value chains of our previously mentioned six sub-themes. The weighted average revenue purity of the overall portfolio must exceed 75 percent, so we mainly focus on companies with A and B ratings. We also exclude category D companies, which are considered old food.

Do you use external ESG ratings providers?
Currently more than 95 percent of the portfolio’s market value is invested in companies with an existing ESG score. For these companies, we apply internal ESG criteria and also use data from large third-party providers. For the other companies without a rating – mainly due to their small market cap – we apply our internal ESG criteria. Our strategy currently has an overall AA MSCI ESG Rating.

Do you have market cap constraints?
No. Our portfolio reflects a mix of young, smaller, fast-growing ‘disruptors’ and established companies with a strong market positioning, a clear moat and attractive cash generation. Currently 40 percent of our portfolio is invested in companies with a market cap of more than $10 bn. Another 40 percent is invested in companies with a market cap between $2 bn and $10 bn, and the remaining 20 percent is invested in smaller firms with a market cap below $2 bn.

What is your average holding period?
By its very nature, thematic investing is looking at changes and trends that have durability. Our strategic time horizon tends to focus on three to four-year cycles. Tactically we have a shorter time horizon, mostly focused on the calibration of risk-reward and rebalancing. The portfolio is expected to see a yearly turnover of around a third.

Do you like to meet management before you buy a stock?
As previously mentioned, one of the key aspects in our proprietary scoring system is access to and track record of management. Hence, it is crucial for us to first engage in a thorough discussion with the company. This ensures that we fully understand its operations, strategic goals and financial health, allowing us to make well-informed, long-term investment decisions.

What is your preferred format for meetings?
For us it is very important to be in regular contact with management and the firm’s IR department. We actively seek opportunities to engage with management through multiple channels, including one-on-one, in-person meetings, virtual discussions and interactions at conferences and roadshows here in Switzerland.

Why should companies meet you?
Within the food revolution team, we are a dedicated team of five specialists with a broad network of corporate contacts and investors. We are a trusted and valued investment partner, thanks to our extensive expertise in the agri-food industry. We maintain close connections with companies across both the publicly traded and private equity sectors. This dual approach allows us to gain a comprehensive understanding of a wide range of market developments, opportunities and new emerging technologies along the entire agri-food value chain.

What is your outlook for the remainder of 2024?
Within our universe, we see encouraging signs that the food industry is about to enter a new innovation and volume cycle after an extended period of high food inflation, ‘shrinkflation’ and de-stocking. We are very positive on companies exposed to organic and healthy foods, as well as companies active in the food ingredients space. We are confident that such firms will benefit from the improving general dynamics in the food industry.

We are also confident in the potential of companies that specialize in sustainable packaging solutions. This industry is gaining global traction as governments intensify their efforts to tackle food packaging issues. Policies are being implemented to ensure packaging is recyclable, setting mandatory reuse targets and restricting certain single-use packaging types.

By Gill Newton, partner at Phoenix-IR.

Liontrust was launched in 1995 and listed on the London Stock Exchange in 1999. Today, there are seven teams that invest in global equities, sustainable investment, global fixed income, and multi- asset. A third of Liontrust’s AuMA is in sustainable investment. There is no single house view. AUM are $27.8 billion as at 31 December 2023. The firm is a signatory to the United Nations Principles for Responsible Investment (UN PRI).

The Liontrust GF Sustainable Future US Growth Fund was launched in July 2023 and is managed by Chris Foster, Simon Clements, and Peter Michaelis. It is an Article 9 fund and focuses on 35 – 55 stocks.

Chris Foster joined Liontrust in April 2017 as part of the acquisition of Alliance Trust Investments (ATI). Chris had initially joined ATI through the management training programme after graduating with a First Class Honours degree in Economics and Mathematics from the University of Edinburgh. Chris is a CFA Charterholder. Chris has ten years’ industry experience and has been part of the Liontrust Sustainable Investment team for eight years.

Co-fund managers Simon Clements and Peter Michaelis also joined Liontrust in April 2017. Prior to managing funds at ATI for five years, Simon spent 12 years at Aviva Investors where latterly he was Head of Global Equities. Peter has managed Sustainable and Responsible Investment portfolios for over 20 years and was previously Head of Sustainable and Responsible Investment at Aviva Investments.

In recent years, Liontrust has made a number of acquisitions such as Majedie and Neptune, how are acquisitions integrated?
Each team is very much independent from the rest of the organisation. Our team joined in April
2017 and has been kept as a separate team to those other acquisitions. We don’t have a CIO and we don’t have a house view. It’s been very seamless for us – the support services we get from Liontrust, the sales, the marketing, the compliance, the risk, the performance stuff and all the distribution is unchanged.

Continue reading →

Rathbones Group is a leading, independent provider of investment and wealth management
services for private investors, charities and trustees, including discretionary investment
management. In September 2023, Rathbone and Investec Wealth & Investment UK
combined – creating the UK’s leading discretionary wealth manager with $125 billion of
funds under management and administration. Within the group, Rathbone Investment
Management (discretionary management) are fundamental investors who combine top-
down asset allocation and sector analysis with stock-picking.

Sanjiv Tumkur joined Rathbone Investment Management in 2016 as Head of Equity Research, becoming Head of Equities in 2022. He is responsible for developing and promoting
Rathbones’ equity investment philosophy and process. He joined from Investec Wealth where he was a member of the Research team and provided equity analysis and recommendations to the firm’s investment managers. After reading Philosophy, Politics and Economics at Oxford University, Sanjiv spent nine years at Morgan Grenfell. He then spent three years at AllianceBernstein.

How have things changed since the merger?
Post-completion, we are working to align Rathbones’ and IWI UK’s approaches, looking at
both organisations and incorporating the best from each. We are similar businesses, with
similar client bases and client objectives, and we are excited about the opportunity to create
the UK’s leading discretionary wealth manager. Continue reading →

Pyrford International, founded in 1987, is an investment boutique that operates independently within Columbia Threadneedle Investments. Pyrford is a provider of global asset
management services for collective investment funds, investment management companies,
local and state bodies, pension schemes, endowments and foundations. Its investment
approach is rooted in capital preservation and its strategies include global absolute return,
global equity and international equity.

Suhail Arain is head of portfolio management for the Americas. He joined Pyrford in 2008 as a portfolio manager covering North American equities having previously worked at Scottish Widows as a global equities portfolio manager and research analyst. He has more than 25 years’ experience in the asset management industry with a particular emphasis on US and
global equities.

Arain graduated from King’s College, London with a degree in law and completed a masters in finance from London Business School. He also holds the CFA designation and has held positions at KPMG, Hambros Merchant Bank, Prudential and ABP Investments.

Pyrford is owned by Columbia Threadneedle. Do you operate independently?
We operate independently of Columbia Threadneedle so nothing has changed for us in terms
of our investment process or our clients.

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David Shaw is co-head of global equities at AXA Investment Management. He also manages the Global Sustainable Distribution Fund, co-manages the Global Sustainable Managed Fund and is deputy on the American Growth fund. He joined AXA in 2016 from Aerion Fund Management (2000-2016). Before this he worked at NPI, NatWest Investment Management and United Friendly Asset Management. He was educated at City University and has a BSc (Hons), Electronic Engineering.

AXA IM is part of France’s AXA Group, a global leader in insurance and asset management with AUM of $916 billion. AXA IM traces its roots back to 1994 and today is present in 22 offices in 18 countries. The firm is an active, long-term, global, multi-asset investor. AXA’s primary equity management operations are Paris and London. The London office runs a number of global equity funds including a number of thematic and geographic funds.

Equity AUM in London and Paris?
$61 billion in equities.

What’s the equity AUM figure for London?
$36 billion.

How do London and Paris co-operate?
Paris is predominantly European equities, the global small cap team, the convertibles team and the multi-asset team. London manages sector specific funds such as technology, healthcare, Thematic and regional funds such as The American Growth Fund as well as a number of global funds. Many of the sector specialist fund are quite US-centric given their technology/healthcare skew. If you note that >60% of the MSCI is US, then we have higher exposure to US equities. But I wouldn’t want to put people off visiting Paris. We do collaborate and often share ideas with the global small cap team in Paris, for example.

In terms of collaboration, we have two formal meetings a week – one with a regional focus and the other is more thematic/sector specific. Teams from London, Paris and Hong Kong share thoughts. We do a good job of getting the London and Paris teams to collaborate. Names from the American Growth may also be held in the global small cap fund.

Which screens do you use?
Fund managers have a lot of personal autonomy. We tend to look for quality growth. Some strategies are more GARP while others are out and out growth. (We hold a few names that are still unprofitable but working towards it, companies with innovative, breakthrough technologies).

Do you use benchmarks?
Yes – most strategies have an appropriate benchmark. We are benchmark aware, not benchmark driven.

Active share?
Most portfolios hold 40-60 stocks, so our active share ranges between 60 – 70% dependent on the fund.

Minimum market cap?
Around $1 billion – Small cap team would be lower.

Average position size and largest?
Largest – we would have exposure to Apple even if it is underweight for our US funds. So that would be our largest holding without being an active bet. A typical active weight is 100 BP above the benchmark.

Average length of a holding?
4-5 years+. A couple of names in my US portfolio we’ve held for 6 – 7 years. We buy and hold where companies are executing well. We want to be long term investors, and invest in companies that grow and develop. However, fund managers may trade around a position so will trim if sentiment is overly optimistic.

Geographic allocation?
>60% in US. A lot of the global/specialist strategies are heavily exposed to the US e.g. our healthcare and technology funds.

Sector allocation?
We pay attention to sector allocation but look for good organic innovative, growth names. Some sectors such as healthcare, technology and consumer discretionary in the US are good places for innovation and new ideas. Sectors where you don’t see much innovation and growth are, for example, financials, utilities and energy and we are typically underweight these sectors.

How does the team split sectors and geographies?
We do have our technology and healthcare specialists, but fund managers are attracted to certain sectors by the nature of their investment style. Steve Kelly and I tend to focus our attention on Healthcare, Technology and Consumer.

61% of assets are ESG integrated, how is ESG integrated into the investment process?
We have a large Responsible Investment team (more than 30 people) which supports the whole business, not just equities. In addition, there is a team of 7 ESG & Impact analysts who work more closely with the equity team. We have an Impact Fund range as well as dedicated ESG funds (our ACT range). The sustainable funds that I’m involved in all have a high degree of ESG integration. The sustainable funds look for companies that can deliver sustainable opportunities including environmental or social progress. As growth investors, we are looking for businesses of the future and they normally align well with ESG. Younger businesses take those responsibilities more seriously.

Discuss some holdings and why you invested?
Mondelez – bought it for my US funds in 2016 and still hold it. The weighting has increased as my confidence in the growth dynamics and management has grown over time. When I first bought it, I didn’t have much exposure to consumer staples. It was one of the better food producers, with faster growing categories. It was growing slower than its overall category due to a focus on margins that was stifling growth. The management transition of 2018 has gone well, and Dirk and Luca were very early in transitioning from a cost focus to looking for more
growth. They also moved away from the traditional US centralised Chicago HQ to a more decentralised localised management style where local offices have a say on sales’ strategies and product development. So, growth is now in line, and they have managed to keep within their margin framework.

Food producers can face challenges and our Responsible Investment (RI) team have been a huge help in this regard. We, as a firm, wanted to learn more about deforestation and so our RI team had a meeting with Mondelez about how they ensure their suppliers are not involved in deforestation. Overall we felt that Mondelez are ahead of their peers. While we would like them to do more, it is good to have the back up of RI team and they came away with good outcome from their engagement.

NextEra – the only US utility that we own. We own it in our global portfolios, as well as some US funds. They are forward thinking, and it has delivered the best organic growth amongst US utilities, partly due to its innovative early adoption of renewable energy. And being based in Florida helps (population growth). NextEra has more organic growth than most US utilities. It is also very well positioned due to its renewables exposure in terms of ESG. Their target is “real zero” – by 2045 – 100% renewable energy generation – and they are well on way to achieving it.

Chipotle – My colleague, Steve Kelly, first invested over a decade ago for the American Growth Fund. It has a combination of organic growth via new store expansion and menu innovation. (It has a simple menu so it can add in one or two new ideas). It has some of the best unit dynamics in the quick service industry in US. Covid gave them the opportunity to develop their digital offering – on-line or take away and they’ve been very successful there. 2023 sales are forecast to be 80% higher than in 2019. So, they have managed to grow very strongly for last 3 – 4 years and there are still some things they can do better. Productivity is probably not as high as should be as they have a number of new hires who take time to get faster at making burritos, for example.

Dexcom – another >10 year holding. Great example of a holding that started with one team and other teams have become interested. It started out as a holding in the American Growth Fund, and it is now widely held on our Thematic funds, our healthcare funds, Global funds and the convertible team owns the convertible. So cross pollination of ideas leads to more teams owning it. Holdings of names that execute on the long term growth strategy, do snowball as fund managers hear the story, and it becomes a major holding across the firm. Dexcom is
the creator of the continuous glucose monitoring industry. Innovation keeps coming, making the product smaller, making the sensor last longer etc. It improves health outcomes and users are big fans.

Chart Industries – a newer name we recently added. I met the company properly in November 2021. The business has changed in recent years. Their core business and expertise are in gas compression and liquification technology. In the last 3-4 years, management has transitioned the business away from the legacy LNG business and is growing in hydrogen, biomass, carbon capture and storage. So, from fossils fuels to fuels of the future. We originally added it to the US funds and now it is in convertibles and global small caps as well as we’ve spoken to other teams about it.

Do you like to meet management?
Yes, but it can be hard work to carve out time to prepare for a meeting and we do like to do our homework. We like to check market expectations, and gain comfort from management as we are looking to be long term holders. We want a company to meet/exceed long term guidance. We want to understand what levers a company has if things don’t go as expected.

Preferred method of meeting management?
1/1s generally – with a popular name you could have 4-5 PMs joining the meeting from Axa IM. Group meetings can be productive though as sometimes another investor takes a different angle that you hadn’t appreciated. We prefer face to face meetings if possible. And we like companies to be consistent. It is frustrating if a company comes over and starts to build interest and then don’t come back. Year 1 our US specialist may see it, year 2 – a chance to get the company in front of a few more colleagues. Just because we are an existing holder, it doesn’t
mean the position couldn’t be increased (by other funds internally).

Any companies that stand out as particularly good at IR and why?
Tractor Supply stands out, it’s a fairly recent addition to both my GARP US portfolio and the Global Sustainable Fund. They are good at explaining the business mix and the cyclicality. Mary Winn Pilkington (Investor Relations) does a good job of explaining the different parts of the business and management are quite forthcoming.

Brunswick – we like how IR tries to frame the business. Some look at its history and how it performed during the Global Financial Crisis, but the business is now very different as the growth in Mercury engines business has reduced its cyclicality. They’ve downsized the pure boat business so that is now only 30% of revenues. Engines and accessories are the lion’s share and is more a repeat business so less cyclical.

Why should companies meet you?
We are genuinely long term and positions can be increased across numerous funds, even convertibles.

What are the major changes you’ve seen during your tenure in investment management?
Information flow has increased massively – in both detail and complexity. However, the fundamentals remain the same – if you buy a company with good organic, innovative ideas you tend to get rewarded. And you have to keep evolving and building on skills learned elsewhere.

This interview appeared in the recent digital edition of IR Magazine

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In other jurisdictions, this document is issued by AXA Investment Managers SA’s affiliates in those countries.

Pacific Asset Management (PAM) is an independent asset manager based in London.  PAM’s investment teams manage global assets in excess of $4.4 billion. PAM’s single manager Craft
Investment approach offers strategies where investment skill and experience have proven to
outperform, by focusing on markets that are less efficient, whilst their multi-asset teams provide technology enabled and innovate risk targeted fund ranges. PAM is committed to sustainable investing and offers a range of sustainable multi-asset portfolios, as well as an Article 8, global long only Longevity & Social Change fund.

Dani Saurymper is the Portfolio Manager in Pacific’s Longevity and Social Change team. Prior to joining PAM in July 2021, Dani worked at AXA where he was Portfolio Manager of the AXA Framlington Longevity Economy fund. He was also Portfolio Manager of the AXA Framlington Health Fund and research lead for Health, Ageing & Lifestyle at AXA Framlington. Dani has over 20 years experience in the Healthcare sector.

Julia Varesko is a Senior Analyst in Pacific’s Longevity and Social Change Team. Prior to joining PAM in September 2021, Julia was a senior analyst covering diversified financials at JP Morgan. She has also held roles at Elsworthy Capital and Berenberg Bank as well as a prior period at JP Morgan where she spent six years covering the Capital Goods sector. Julia is a CFA Charterholder and holds an MSc in Accounting and Finance from the London School of Economics and a BSc in Economics from University College London.

AUM in the fund?

Currently $50 million as the fund was only launched in late October/early November 2021. We have lofty ambitions and believe the capacity for a fund such as ours could be at least $1 billion.

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