Catriona Burns grew up surrounded by market animals, but they were not your typical stockbrokers or traders.

She comes from a long line of ferocious bargain hunters, including her mother who was raised on a property in Rockley, NSW, (population 182), and where the family spent school holidays.

As the daughter of an auctioneer father, and jewellery and decorative arts specialist mother, she grew up on the auctions circuit “finding undervalued gems with a view to selling them later for profit”, reflecting her family’s interest in investing over the generations.

“The women in my family have a very long history in the stockmarket,” Burns says. “My great, great grandmother had a portfolio of global and Australian shares, and my great grandmother was one of the first women to graduate with a science degree from Sydney University in 1910 and got the university medal. She loved mining stocks and would go to Mt Isa mines.”

Burns’ grandmother was an equally active investor who would check the health of her share portfolio every day in the newspaper.

Beginning in February, Burns will helm Wilson Asset Management’s new global-listed investment company, returning to the firm where she started her career after a work experience stint whilst at university in 2003 led to a full-time roll as an analyst.

In between, she was a portfolio manager at global ethical investor Hunter Hall, working in London, and was one of the first employees at John Sevior’s Airlie Funds Management.

“From day one,” she recalls of her time at WAM working with chairman Geoff Wilson and Matthew Kidman, “we were engaging with the management of listed companies, they would take me to literally everything they did”.

Reckon, Melbourne IT and Credit Corp were some of the stocks on the radar back then. “It was really an amazing opportunity and really opened my eyes to the market and small [and] mid-cap investing.”

Burns will keep the WAM focus on small and mid-caps as she turns her thoughts to global equities again. Her philosophy will be finding undervalued growth companies and identifying catalysts for revaluation.

“Whether it’s the US, Germany or France there’s so many stocks out there, leaders in their field or up-and-coming technology companies you can access by investing outside Australia,” she says.

“Growth globally looks strong, for once we’re getting synchronised global growth. The question will be how quickly rates go up and does volatility pick up as that occurs given current lows on that front?”

Every market has stocks that look interesting, but Burns is partial to industrials in Germany, especially those that are involved in industrial automation, such as KUKA AG; Prysmian Group, a leader in cabling for the telecom and energy sector; and Seria, “the equivalent of The Reject Shop in Japan, but classier stores and better merchandise” which has a large roll-out ahead of it.

Food security and the rising middle class in China and India are two themes she is confident will yield opportunities.

Burns says she will be guided by industry and positioning, free cashflow generation, return on capital, “and nothing is off limits, but it has to fit the process. If it doesn’t, we’ll hold cash”.

Smalls and mids demand a more intrepid approach than large-cap investing.

“We’re happy to get on a plane and go speak to them, but the beauty of small, mid-caps versus the large caps is you can actually speak to the management. Who are you going to speak to at Apple if you’re some Aussie? And not to be disparaging at all of [large caps] because the investor relations offshore is incredible. Here, you’d rather speak to the management.”

At Hunter Hall, she worked alongside founder Peter Hall, who she describes as highly supportive. She stayed for five years, the first four in London. “I love going and seeing companies, it’s one of the best bits about the job.”

She recalls driving across Germany in 2009 visiting companies with a list of addresses, a rental car and a TomTom. The timing meant that even world-leading companies hadn’t received investor visits because everyone thought the world was ending.

“We uncovered some fantastic companies [for example] Dürr AG, the global leader in paint systems for painting cars. The order book had been decimated but, they’d maintained their market position. Within the industry they were still the dominant player, it was just no one was ordering. So, on face value it looked expensive, but as soon as the orders started coming back in, you know that’s the beauty of cyclicals. The time you want to buy them is when they look very expensive and then as orders come back they actually look cheap again.

Dürr AG delivered a quadruple return within a few years.

Airlie was “a fantastic learning experience from both an investing perspective and being part of the early growth phase of a business”, and Burns took away from there the emphasis on portfolio construction and capital preservation.

“‘The companies don’t change but the prices do’, John would say to me. The point was that if you knew your stocks and had a clear view on valuation you could be ready to act when opportunities came up.”

CSL, ResMed, Ansell, Amcor are just as global as they are Australian, the fund manager points out, and she has never really taken her eye off international markets.

In the US, “these tax changes will be very stimulative. If [Donald Trump] then goes on to add an infrastructure program, that’s going to add even more to the US economy. I think Australia has to be careful in terms of competitiveness, we’re an outlier now in terms of the tax rates, etcetera.

“If we’re sitting there at 30 per cent and they’re at 21 [per cent], there is a decent difference there,” Burns says. “Do you want to set up US operations or do you want to set up Australian operations where we’ve got high wages. There’s other disadvantages to being in this market, if you don’t level the playing field, then you quickly get out of whack. It will be interesting how it develops going forward.”

Companies are thinking about where to set up new facilities all the time. “You have to incentivise companies to want to have their operations here, you make it worth their while and they will.”

Burns also disagrees that US companies repatriating capital and capitalising on tax reform will take the lazy route of returning it straight to the hands of shareholders. There is evidence already of wage increases and bonuses, and “you want to balance all your stakeholders being happy”.

Watching Amazon’s march play out from a global perspective, Burns is convinced there are companies, just not all, who can successfully adapt to structural change.

“It’s like the hundred yen stores, if it’s a dollar item you’re not going to get it delivered. Then, you think you’re going in for one little thing and you spend ten dollars.”

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