Catriona Burns, WAM Global
Wilson Asset Management Global portfolio manager Catriona Burns on her new appointment and uncovering opportunities abroad.
A passion for investing runs through fund manager Catriona Burns’ blood, a trait that has come down the female line of her family in particular.
Following a stint overseas in London, Burns has come back to where she started as an intern in the early 2000s, at Wilson Asset Management. Burns is taking the helm as the company’s lead fund manager for WAM Global.
Her pursuit is ﬁnding undervalued stock market treasures, not unlike her great grandmother who hunted for these opportunities in Australia’s mining sector in the early 1900s. But Burns is looking beyond that, and more broadly, scouring for opportunities in the small and mid-cap corners of stock markets all around the world. Burns believes she has identiﬁed a few gems already, and was more than happy to share what she’s found in an interview with InvestSMART.
Read the full interview below.
Laura Daquino: I’m here with Catriona Burns, lead fund manager at WAM Global. After spending most of her career overseas, Catriona has returned to Australian soil with a keen eye on opportunities here and abroad. Catriona, what is the aim of WAM Global?
Catriona Burns: The aim of WAM Global is to provide Australian investors with access to oﬀshore, predominantly small, mid-cap companies. We think a large part of the Australian
market has very little exposure to some fantastic global leaders, and interesting, exciting companies oﬀshore that we engage with that they would traditionally not be able to invest in, in their own portfolios.
And, if you look at the stats, 3 per cent of the world’s companies are listed on the ASX, and 97 per cent aren’t. The majority of Australian investors have their savings in only that 3 per cent. There’s really a lot of the world’s market they’re not getting to access. And so, in terms of what we’re going to do with WAM Global, it’ll be a listed investment company that provides shareholders with capital growth and income, derived from a diversiﬁed portfolio of international equities.
Laura Daquino: And which regions in particular are piquing your interest right now worldwide?
Catriona Burns: Look, we as in, in particular, we can invest anywhere. Every market has particular companies that may be of interest. At the moment, I’m about to go oﬀshore in the next few weeks to spend time in Japan, and the US, China, Switzerland, and the UK, where we’ve lined up a hundred companies to go and visit for these particular regions where we are ﬁnding companies of interest. But, we’re stock pickers, and we’re bottom-up, on the road, going to meet the management teams. And so, there’ll be companies in all regions that are of interest – we look very broadly.
Laura Daquino: Fair enough. And are there any headwinds overseas that you are especially wary of, like rising interest rates, or anything else?
Catriona Burns: Rising interest rates obviously is going to create, I think, more volatility in markets over the next year. If you look at the US, it has been debated whether it will be three or four [rises] this year, and that will obviously create volatility, but that will create opportunities for active stock pickers. Passive money has done extremely well over the last year, but in a more volatile environment it really pays to be able to pick individual stocks that you think are trading at a discount to true value.
Laura Daquino: On that note of stock picking, which stocks exactly? Could you mention a couple of stocks that are on your radar at the moment, whether that’s here [in Australia] or abroad, and why?
Catriona Burns: Yes. One of the companies that we’re looking closely at, and we’ve invested in
the past, is Seria, which is the dollar stores in Japan. They’re halfway through their store roll-out program. If you’re looking at an Amazon-impacted world, we think they’re at the lower end of the risk curve than the Macy’s, et cetera, of the world. So that’s one stock that we’ve looked at a lot in the past, and done well at, and it still is potentially interesting. Another one is Scout24, which is sort of the combined REA-Carsales of Europe. The penetration levels, or online migration, is still relatively low in places like Germany compared to some of the other markets. So they are a couple of stocks we’re looking at.
But I mean, our vehicle will not until June, so we’re constantly seeing companies all the time, valuations are changing all the time, so we’ll be reassessing and considering candidates closer to the time. I mean, one of the beauties of Wilson Asset Management’s ﬂexible mandate is that it places no limit on the cash weighting, so if we think valuations are full, we can hold high levels of cash, which gives us a huge opportunity if there is increase in volatility that we can be ready to move on companies that look really interesting.
What we’ll be doing is getting out on the road, seeing as many companies as we can, so that when there’s opportunities, and we know the companies, then we can move quickly.
Laura Daquino: Geoﬀ Wilson [WAM founder, chairman and portfolio manager] has been quoted as saying that you know WAM’s investment process intimately. Could you talk me a little bit more through this investment process – I know have touched on it already – but also the dividend pay-out policy for this LIC, if it has been ﬁnalised just yet?
Catriona Burns: Yeah, so the investment process, we’ve got a rigorous rating process that looks at analysing the industry, assessing management, forming a view on earnings growth potential, and the valuation of a stock. This proprietary investment process has really served Wilson Asset Management well over 20 years, and if you look at the returns that WAM Capital has produced since inception, that’s close to 18 per cent per annum. And I worked at Wilson Asset Management helping to develop the process with Geoﬀ, and then went overseas to gain global experience, and am now coming back to do the WAM Global product with Wilson Asset Management. It’s very exciting. I’m a real believer in the process, and think it could deliver strong risk-adjusted returns to shareholders.
Laura Daquino: And the dividend pay-out policy hasn’t been ﬁnalised just yet, has it, as the LIC’s prospectus hasn’t been launched?
Catriona Burns: No, it hasn’t been lodged. The prospectus will be lodged in late April. The dividend policy will be formally dealt with in the prospectus. Our intention is to pay a steady stream of fully-franked dividends, but detail will be expanded on in the prospectus and will depend on the realisation of proﬁts and tax paid.
Laura Daquino: Now, just going back a little bit, I understand that you yourself come from a very long line of investors. Just to give our readers a little bit more background, can you talk us
through this a little?
Catriona Burns: Yes, sure. All the women, actually, in my family have had a long history in the stock market. Although my great grandfather was one of the founding fathers of the Sydney Stock Exchange, so there were males earlier on, but the women have continued it down the line. My great grandmother studied science at university, was very interested in mining, and used to invest in mining shares and go out to Mount Isa to gain insights to her mining stock investments. And then my grandmother, we’d go and spend the holidays with her, and she’d be constantly checking her stock portfolio every morning – so it’s really come down the female line in my family. There is a long history investing in shares through the family.
Laura Daquino: Yeah, it’s deﬁnitely in your DNA. And I mean, you started quite young with your career too, where you went overseas quite early on. I would suspect that going overseas really would’ve opened up your eyes further as well to opportunities abroad. Were there any particular regions, when you were in London where you worked, that really got you into investing overseas?
Catriona Burns: When living in London you’ve got such easy access to both the US and all of Europe, so we’d be on the road constantly seeing and meeting company management. I remember going to Kansas City in late 2008, early 2009, so almost March 2009, which was the bottom of the market, and going to Kansas, where one of the companies we were seeing said, no one’s come to see us for 18 months, which always makes you feel excited because you think there’s an opportunity and everyone’s given up. We just get on the road, get in the car, drive ourselves around and go and see companies, whether it was through the US or through Europe. You gain amazing insights from actually getting out there and getting on the road.
Laura Daquino: Yeah, for sure. Well thank you very much for your time today, Catriona, over the phone, and best of luck.