KEY POINTS:
Carmel Fisher draws on more than 20 years experience - including the 1980s bull and bust markets - when making investment decisions for her funds management company Fisher Funds.
Fisher began the company in 1998 and now offers four unlisted unit trusts, two listed funds - Kingfish and
Barramundi - plus a portfolio service for people with more than $300,000 to invest.
Funds under management has grown from the initial $17 million Fisher managed for former employer Sovereign to more than $450 million now.
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You and your husband Hugh both quit your jobs to establish Fisher Funds 10 years ago.
Obviously you each had the skills and ambition to step out and form your own company.
What other factors were critical for the success of the firm?
I think when we established Fisher Funds I was having my first child, which was really the catalyst to starting the business.
But also at the time there was really only one other boutique fund management firm and when I say boutique fund management firm that focused on one area of speciality.
I liked that idea. I'd seen that trend develop in Australia and internationally and thought that there was a place for it in New Zealand.
I think really for the first few years to just focus solely on New Zealand equities, and in particular the small companies within the New Zealand sharemarket, I think were quite critical because we were able to focus our efforts on a small number of investments and fortunately we picked the right ones. And it was a time when I guess small companies were performing well, so all our stars alligned really.
I think that was part of the early success anyway.
One of our readers, Martin Kellet, points out the ancient Egyptians only etched in stone on their pyramids their battle wins - never the loses.
He suggests your Monthly Newsletter takes a similar approach.
What investment decision, with the benefit of hindsight, would you now make a different choice on?
I think if Martin had been with the fund for the last eight years he would have seen some mention of the losers - we just haven't had any of them for the last two or three years.
But we are quite candid in our monthly newsletters, so if something goes wrong, if the share price falls in a month, then we do talk about it and we do try and explain why it has fallen and we will certainly talk about weak stocks.
The last one we exited, I think, was Turners Auctions and that was quite a while ago. When we exited it we explained what we didn't like about it any more, so I think we do talk about our loses just as much as our wins. Fortunately though we've had so many more wins than loses.
You have a significant holding some of the mid-cap stocks, which may work to reduce the free float and force up the market price. Do you consider the market price overstates the value at which Fisher Funds could realise their investment?
Yes, I do. I think that when we try and buy a decent line of the stock and sometimes we have to pay a premium in order to get it, so the market price becomes meaningless.
Really the price of the stock is how much it is going to cost to get a decent volume and for us we often do find we pay a little bit more than the market price to get access to stock.
Similarly, if we are selling out of a company if we've made the decision to get out and we just want to get out and re-deploy those funds somewhere else, so we don't mind taking a small discount on the way out.
For us market prices don't mean a heck of a lot. We do have a fair idea of what sort of price we can get in and out of each of our stocks, but they're never too far away from the market price. You might be talking a five per cent discount or a seven per cent discount. The market price won't be 20 per cent different to what we can get in and out of the stock.
And you don't think the size of your holdings have an impact?
Look, maybe on the day. If we went out there today and tried to buy half a million Michael Hill shares then absolutely we'd push the price up.
But after we'd finished buying the price would fall back down again. It's flattering to have it suggested we are behind the market and we're holding prices up - we're really not that big in the scheme of things.
You've begun investing in Australia with your Barramundi Fund. Are you likely to increase your focus across the Tasman?
Yes I think so and I certainly think most of the new investors we've had since Christmas have been more inclined towards Australia than New Zealand.
There seems to be a common view that the New Zealand economy is going to move sideways for the next couple of years whereas Australia still has some natural momentum.
We are seeing lots of investment opportunities in Australia, probably more than we are in New Zealand.
As at today I do get more excited about Australia than I do about New Zealand.
It's also fair to say that we are getting full-up in New Zealand. We are getting so large here that some time in the next 12 months we are probably going to close our funds in New Zealand and we'll therefore focus on Australia.
In New Zealand we don't want to be so large that we can't make the investment decisions we'd like to. We own quite a chunk of a lot of New Zealand companies and we don't want to get to the stage where we've got so much money that we can't buy a company we like, we're just too big, so I do think Australia will be our natural focus over the next few years.
So are there any plans to move outside of the New Zealand and Australian markets?
We are always being asked by investors if we could offer more than just New Zealand and Australia because they'd like to give us more money, but they don't want to keep putting it into New Zealand and Australia.
And so, we wouldn't say no. It's really going to depend on finding the right investment talent.
If we can find somebody or a team of investment professionals who share our investment philosophy and they happened to operate in North American small companies or Asian small companies, then we would certainly welcome them into our team and offer other funds.
But we've got to find the people first and whatever markets those people specialise in will be the market that we offer.
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Listen to the audio for the full interview, including how Fisher Funds will participate in KiwiSaver, what they thought of Mark Weldon's proposed remuneration package, how Fisher Funds select companies to invest in and what they do in a falling market.