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Jacob Mitchell
+ About Jacob Mitchell

Chief Investment Officer and Portfolio Manager

Jacob Mitchell is chief investment officer and portfolio manager at Antipodes Partners, which he founded in March 2015. Prior to this, Jacob spent 14 years at Platinum Asset Management, where he was most recently the deputy chief investment officer and a portfolio manager of the flagship Platinum International Fund. On resigning from Platinum in November 2014, he had direct portfolio management responsibility for over $3.5bn in FUM and was responsible together with the CIO for the firm-wide ($25bn in FUM) implementation of the investment process. He also served as portfolio manager for the Platinum Unhedged Fund (January 2007 to May 2014, achieving 5.7% per annum outperformance after fees) and the Platinum Japan Fund (January 2008 to November 2014, achieving 9.9% per annum outperformance after fees), the highest alpha generated by any Platinum Trust Fund over this period.

Three rules for investing globally

Tuesday, September 27, 2016

By Jacob Mitchell

Domestic investors are waking up to the limitations and inherent risk of having all of their investment eggs in one Australian basket. The trifecta is having high exposure to Australian property, Australian shares and/or the Australian dollar. But this can change by diversifying globally.

Antipodes Partners is a pragmatic value manager of global equities that deploys three investment levers that aim for favourable returns. They are to invest long (buy) in listed stocks, short (sell) stocks, and manage currency risk.

Much of the market is focused on returns rather than risk. We’re focused on the opposite because if you manage risk well, returns should follow. To achieve this, we apply three rules as part of our stock selection process.

At the stock level, there must be a deep “margin of safety” and “multiple ways of winning”. While at the portfolio construction level, the stock needs to offer a “diversified source of alpha”. There’s no point considering a new stock contender for the portfolio if it replicates and magnifies the same risk as an existing cluster of exposures. Ultimately, we seek an eclectic portfolio as downside protection.

1. Margin of safety

The concept of “margin of safety” should be familiar to most investors. It was coined by the great Benjamin Graham, and later popularised by Warren Buffett.

It is a quantitative measure that demands a generous buffer or gap between what an investor thinks a stock to be worth and what the market is paying for it.

2. Multiple ways of winning

“Multiple ways of winning” is a core driver of Antipodes Partners’ investment philosophy. The investment case for a stock cannot just depend on a single driver (or point of failure). It must exhibit resilience via multiple drivers that contribute to the expected outcome. This provides downside protection if our judgement on a specific driver is misplaced. These multiple drivers include: competitive dynamics, product cycle, macro management, regulation and macro/quantitative factors.

For example, on the long (buy) side, we own cheap US incumbent software “defensive” stocks like Cisco, Microsoft and NetApp. We are attracted to the “multiple ways of winning” (or drivers) in US natural gas via stocks like Consol Energy. Across Europe and Asia, there is restructuring, corporate self-help and generational change taking place in businesses like Samsung Electronics, Hyundai Motor Company and Telecom Italia.

3. Diversified sources of alpha

The portfolio provides both protection and alpha generating opportunities via shorting and active currency management. Through shorting, we are positioned against “expensive defensives”, infrastructure stocks masquerading as “bond proxies” in an ultra-low global interest rate environment, and “high-yield” debt beneficiaries funding “adjusted EBITDA” and “adjusted EPS” growth with cheap debt – it won’t last.

In currency, we have long held a significant position in the Norwegian Kroner. Despite behaving like an emerging market currency, Norway is anything but emerging. Courtesy of its past oil bounty, Norway has an $US880bn* sovereign wealth fund more than double national GDP, a hot housing market, and inflation that has just spiked to 4%^. Pressure mounts for interest rate rises and an appreciation.

We think our portfolio is carefully balanced by our experienced team to meet the pending challenges and opportunities that global markets could deliver in the future.

Antipodes Global Investment Company Limited (ASX: APL) today advised that with broker firm bids being finalised and the capital raising approaching the $330m maximum disclosed in the prospectus, the Board has announced that it will not accept subscriptions beyond $330m. Investors are encouraged to submit their application before the Offer closes.

The General Offer closes this Friday, 30th September 2016.

The Offer is contained in the Prospectus dated and lodged with ASIC on 4 August 2016. Before deciding to participate in the Offer, it is important that you read the prospectus carefully and seek professional advice where necessary. To participate in the Offer, visit our website.

Disclaimer: This is a sponsored article by Antipodes Partners

This report contains general financial product advice which does not take your personal objectives, circumstances or needs into account. You should consider these factors before you make an investment decision and if you are unsure you should seek professional advice.

*August 2016, Investments in Government Pension Fund Global, Norges Bank Balance Sheet.

^August 2016, CPI All-item Index, Statistics Norway.

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