SPEAKER_02: 0:02

Welcome back to Finance Friends. I'm your host, Fabian, and this is season 4. This season we're diving deep into the world of investing. Not just where to put your money, but how to think like a professional investor. We are bringing you conversations with highly intelligent, incredibly motivated investors with weekly episodes. Make sure you stay tuned in. This week we're doing something a little bit different. We're throwing it back to season one. In this flashback episode, you hear from Vat, the Chief Investment Officer at Collins Street Asset Management. Since we first recorded this conversation over a year ago, the firm has achieved incredible results. The last quarter alone, they did over 25% return for an Aussie equity manager. Can you believe that? When most funds are going nowhere, listen to the episode. Hi Vaz. Welcome to Finance Friends with Fabian. How are you today?

SPEAKER_01: 1:06

I'm pretty good, Fabian. Yourself?

SPEAKER_02: 1:08

I'm very well, thank you. So can we maybe share a little bit of uh your background to the audience? So where you're from and what your current profession is?

SPEAKER_01: 1:17

Sure. Um so I'm uh one of the co-founders of Collins Street Asset Management. Um Collins Street uh asset management is a fund manager. We're a boutique value fund manager based in Melbourne. I say boutique because we you know we don't manage billions of dollars. We are value guys, and most of our uh funds are long only equities, um, if I had to generalize.

SPEAKER_02: 1:42

Yeah, fantastic. So so when you say you're a co-founder, what what is your role in the business?

SPEAKER_01: 1:48

Uh so I am chief investment officer um of the Collins Street Asset Management. So my main role is mainly around the investments, so the the various investments our funds make. And uh the other co-founder and and managing director is Michael Goldberg. Um and so we we try to split uh tasks between ourselves, but but if you think of me mainly as the the investment side of things, um that's that's mainly what my my tasks revolve around.

SPEAKER_02: 2:22

Fantastic. And what for our audience that might not be familiar with what value investing is, can you just give us a a quick uh layman's terms explanation of what value investing is?

SPEAKER_01: 2:33

Sure. So uh I guess a value investor is a fundamental investor that uh they use either kind of intrinsic valuations based on earnings or asset values. Um so it's not momentum, it's it's value driven. Uh I most value investors uh are somewhat contrarian. Um we tend to get attracted to the unloved sectors and stocks. Um and so yeah, on a high level, uh that's value investing. I guess the most uh famous value investor who's still alive today is is probably Warren Buffett. Um so yeah, that's that's pretty much value investing.

SPEAKER_02: 3:14

Fantastic. Thank you for that. Uh and maybe so what qualifications do you need to be a CIO or a portfolio manager? And maybe talk us about your your well, your journey. Maybe let's start with your journey. What was your journey to become, you know, the CIO and co-founder of Collin Street Asset Management?

SPEAKER_01: 3:36

So uh my journey was a bit unique. Um, so I I studied commerce law at Monash, um, pretty entrepreneurial from a young age, had various private businesses. Uh the first one was when I was 16, and then uh I knew very early on that I wanted to run my own fund. And so granted, you need um you need to have, I guess, some connections within the financial services world, and and you know, you can't just start a fund uh from scratch at an early age. So so on purpose, um, I decided to um get started in the industry. And so I joined a boutique asset management firm. We were running individually managed accounts, and that was actually pretty much my first job as an employee. Previous roles were with my own private businesses um and kind of pivoted from there to starting our fund. Um so yeah, a little bit different. Um that's that's kind of my background.

SPEAKER_02: 4:45

Yeah. So you you you mentioned you did a double degree in commerce law at Monash, is that right? So have you done any other postgraduate studies, or did you did you to become you know an analyst originally, did you need to study that?

SPEAKER_01: 5:02

Uh so no, I haven't done anything postgraduate. Uh so very early on, uh my love affair with stocks, to be honest, and it's pretty cliche, but but uh I've read probably every book written about um Buffett, Warren Buffett, and Berkshire Hathaway. And so from stocks, I'm self-taught. Um I did have my first stock when I was 12, thanks to my father that raided my piggy bank.

SPEAKER_02: 5:32

Um what was the minimum parcel back then? Because I think it's$500 on the ASX today.

SPEAKER_01: 5:40

I don't know what the minimum was, but but and I can't remember how I even got the money, but we raided my piggy bank and I bought$1,200 worth of CSR um at$12. Which is the building companies are all? So it was a weird conglomerate. They had building and sugar. Yeah, so the sugar division and the building division. And the only reason why we picked CSR is we watched that money program with Paul Clitheroe, and and the recommendation was either News Corp or CSR. And my father, who's in the medical profession, said you've got two choices, and I picked the one that had the highest yield. Uh I should have picked News Corp because I think it did a lot better. So so really that started my love affair with stocks and just really self-taught. Um, you know, throughout high school, I guess uh you know, I I would rather go into the library trading stocks um than than doing sports. So yeah, self-taught, no postgraduates, but but you know, I I constantly read even today. Um so yeah.

SPEAKER_02: 6:47

Yeah, so what so I assume from the age of 12 is probably you knew that that's what you wanted to do, be an investor.

SPEAKER_01: 6:55

Probably 16. So probably by the time I was 16, I I knew I wanted to manage a pool of money. Yeah. Obviously, I didn't, you know, I didn't uh crystallize the the type of vehicle and and how it would look, but but I knew I wanted to manage uh a pool of money, yeah.

SPEAKER_02: 7:12

Yeah, and uh based on obviously your your dad rating your Biggie Bank at the age of 12 and investing in CSR, who who and you obviously spoke about Warren Buffett, who's been the biggest influence on your life and also on your career to date? And it might be more than one person.

SPEAKER_01: 7:29

Yeah, probably uh well, number one would have to be my father. Um, you know, for I don't know if if you would say allowing me to be entrepreneurial, but but certainly not stopping me. Enabling you? Yeah, enabling me. I mean, I mean, you know, he he's I mean he's still a practicing psychiatrist today. He's he's you know uh second generation Greek Australian. It was all about you know going to uni, getting profession. And so directly, I guess you could say, you know, my family, you know, we weren't entrepreneurial family, but but I don't know what hit me, but um I just loved business. Um and I guess having read all the books on Buffett, you know, stocks are businesses. Um analyzing businesses, sectors, industries, you know, I f I find it fascinating. And I think I mean again, I'm not against doing postgraduate work, but at the end of the day, most lessons in life are self-taught. Um and so, you know, reading economic history I love, reading stock or industry-specific history I love. Yeah, and and the third part, and again, it's something that I've done religiously for a long time, is reading your own history. So writing your own journals, yeah, uh, and reading upon your own history, and I'm talking specifically investment history. Yeah. Um, because you know, you do refine your skills over the years and and you try to improve.

SPEAKER_02: 9:07

Yeah, yeah, it's really good insight. And I think a lot of people go on that journey and enjoy that journey, but never really reflect on that journey.

SPEAKER_01: 9:17

I mean, the hard part is reflecting and trying to be not biased, even though it's your own history.

SPEAKER_02: 9:22

Yeah.

SPEAKER_01: 9:22

But, you know, uh, you know, you've got to separate in in my line of work, if I want to talk about being stock specific, you know, just because you made money on an investment doesn't mean you were right. And vice versa, just because you lost money on an investment doesn't mean you were wrong.

SPEAKER_00: 9:39

Yeah.

SPEAKER_01: 9:39

You know, you've you've you've got to uh take a level-headed approach and realize when you were lucky versus when you're unlucky and and and you know, using evidence based on the information at hand currently, whether something is a good asymmetric. I hate using this word because I'm not a gambler, but bet.

SPEAKER_02: 9:59

Yeah.

SPEAKER_01: 9:59

Doing a bet based on the current information. And so, you know, uh perhaps most people find that difficult, but I think over the years, if you start to follow your own journey, you do refine your skill set and you work, you work out what you're good at and what you're not good at.

SPEAKER_02: 10:14

Yeah.

SPEAKER_01: 10:15

So yeah.

SPEAKER_02: 10:16

Yeah. I guess that might lead uh I just want to go back to that because it's interesting when I used to run money for clients, I would tell clients that at this point in time with the information we have available, I either believe this is a good investment or I don't believe this is a good investment for the following reasons. Now, in a year's time, there's probably going to be new information that will affect that decision whether it's right or wrong. But at this point in time, this is what I believe for the following reasons. Yep. Um, and I think a lot of people, yeah, especially a lot of people that might be invest with you or, you know, under your guidance, you know, you might tell them to or recommend you you sell a stock. And then that stock, you know, it could change, it could get an acquisition, uh, take over to whatever it might be. Um, and yet, you know, they might do the stock might do really well, and they look at you, well, you recommended, you know, that I sell that stock, and I said, Yeah, I did, because at that point in time, that was an unlikely probability. Um, anyway, let's move on. What do you think the most successful skills are in your role? Oh, the the skills required to be successful in your position.

SPEAKER_01: 11:16

Um, so I think in today's day and age, I think one of the number if people can grasp removing the noise and not being distracted and having proper thinking time when it comes to investments, I think that helps me a lot. Now I don't know whether a lot of others do that or don't do that, but but that's what I do. So removing the noise and and you know, if I talk specifics, and I know this sounds uh not the best, but for example, you know, I I rarely answer unsolicited phone calls. I only go onto my emails at the start of the morning at the end of the morning. Um I d don't really use social media that much. Um I mean I've got a LinkedIn page, but but that's about it. Um and so removing the noise and having just organic thought that's that that without distraction, I think is number one. Number two is or from our perspective is having convict when the time comes. So so every investment, every new investment needs to make a difference, you know, in my opinion. And there I'm sure there are plenty of ways to make money, but you need conviction um to make a difference. And what's the third? Probably what I said previously, just just reading, reading a lot about history now. That's whether it's economic history, whether it's company or industry specific history, or your own history, but constantly reading history. Yeah. Those are the three things I think.

SPEAKER_02: 13:05

Yeah, and what it's really good, really insightful, um, and thank you for sharing. I guess this is a little bit different. What what's because obviously everyone in their career um has has well everyone in their life and career has has setbacks and challenges, which ultimately is your best learning opportunity, if you ask me. What's been the biggest setback or some setbacks can you share with our audience with you and your career to date, and and how did you overcome them?

SPEAKER_01: 13:34

So I I agree. I think I think the best lessons are self-taught lessons, number one. Um however, uh I guess I guess sometimes, sometimes, again, if you if if you're reading a lot, you could argue perhaps it's best to learn from other people's mistakes than your own mistakes. So so there is nothing that I can think of in the life of Collin Street, you know, we've been around for almost nine years, that I can think of that was anything close to fatal. Um but reading a lot about other people's mistakes and and I guess look, we don't get every investment right, so so I I guess I could say some setbacks have been some investments that have that have not turned out well um and learning from that. Um yeah, nothing fatal, even though I do agree with your comment that you know it's best you know you learn from from previous failures.

SPEAKER_02: 14:38

Yeah, no, thank you for sharing it. Um obviously as a as an investor and a portfolio manager and CIO, you you're not gonna get every decision right. But if you get in more than half of them right, you you're probably gonna have some some great returns. Uh, and what advice would you give anyone, you know, maybe someone that's a junior investment analyst or studying finance, um, to become a CIO or a portfolio manager? Um, you're running, you know, whether it be an Aussie equity, Aussie long-only equity fund or international fund or whatever investment, I guess, uh way of investing you like to invest. What advice would you give someone that uh wants to be um an investment analyst or a portfolio manager or a CIO?

SPEAKER_01: 15:22

Well, I think there are two important things at play and that they are interlinked. So I think number one, uh this is a general advice for anything you any profession, to be honest, is make sure you're doing what you love. Because when you love something, you go the extra mile. And then number two and and maybe you've got to be pretty self-critical, but but make sure that whichever if you want to be a CIO or a fund manager, make sure you have an X factor and that you're you know, in the top quartile of that. And so I think I think human beings are unique in that I think you know, I think there are plenty of things we could end up loving, but but but might not be that good at it. So so I think loving something and making sure you have an X factor because if you don't find something else you love that you're really good at.

SPEAKER_02: 16:24

Yeah, okay. So a combination of something you're good at, but also something you really enjoy. Correct. Yeah, so you can become a good one.

SPEAKER_01: 16:30

You gotta you gotta, I think, correct, spot on.

SPEAKER_02: 16:34

Yeah. I guess that might lead me into a next question because you obviously love what you do, clearly passionate about investing and learning about companies um and doing analysis. And the second thing is being a top performer. Now, maybe it'd be good to share with our audience around Collin Street asset management. Uh, and you know, you've been operating now for nine years, um, the business continues to grow and and the numbers are exceptional. So maybe just share a little bit about Collin Street asset management, the funds that you offer, from my understanding, only available to wholesale investors. Um, but you know, some of the you know, performance numbers that you've been able to achieve and and some some good in well, just maybe share a bit about the business?

SPEAKER_01: 17:19

So so our our flagship fund, which is the fund that's been going for the longest and what we're known for, I think, um, is our long-only Colling Street Value Fund. So since inception, which is close to nine years, net after fees, I believe um our annualized return has been 13.5% or around 13.5%. We are concentrated investors. Um, I think the portfolio currently holds if I include precious metals or gold as as one thematic, even though we have a basket of stocks, but if I include that as one thematic, we we probably have about 12, 13 positions. Yeah um and so you know we we rarely, you know, we don't have high turnover on our portfolio, number one. Um and number two, you you generally do find us at the start of a new investment. We're we're normally in stocks or corners of the market where no one wants to know about.

SPEAKER_02: 18:19

Yeah.

SPEAKER_01: 18:20

For example, four years ago, based on our fundamental analysis regarding mine supply, we we were pretty heavy in the uranium thematic. Um now everyone wants to know about uranium, um, but we we we have taken our profits. Um on the flip side, our precious metal or gold thematic, you know, we we started uh nearly two years ago. Um again, based on what we thought were fundamentals and and geopolitics and and some of the supply and don't supply and demand dynamics we saw. Um and now I guess it's you know precious metals or gold slowly creeping into the you know most uh Western fund managers portfolios in a small scale, it's still quite small. Yeah. So yeah, we we you know we're contrarian, we've done reasonably well, um, we are concentrated, and we just stick to our knitting. Um I mean what what I'm most proud of, to be honest, is is you know, putting aside the last couple of years when rates went from zero to five percent, you know, the years before that or the decade before that's probably been the most difficult if you look historically at value fund managers. Yeah. Um they've had a difficult period. Um I think even Berkshire Hathaway underperformed the index. Yeah. So so you know, it hasn't been easy, but but because we've been able to remain nimble and because we don't manage billions of dollars um and don't want to manage billions of dollars, to be honest, um, we've been able to achieve, you know, those returns.

SPEAKER_02: 20:01

Yeah, fantastic. And that is exceptional to continuously, well, over a over a long period of time, to outperform the the Aussie index um quite comfortably is is um you know deserves a pat on the back. So well done, congratulations. Um what's uh maybe on a lighter topic to finish off? Thank you for that. But uh what's one thing maybe that people don't know about you, Vaz?

SPEAKER_01: 20:25

Um they don't know about me. Probably that I mean, I think I'm relatively young. I'm 39, about to turn 40. Uh but I'm very old school. Um, I need pen to paper, I can't read ebooks, I don't have my emails on my phone. Um yeah, I'm I'm quite old school. I I can't read more than two paragraphs online. I need to print it.

SPEAKER_02: 20:54

Yeah.

SPEAKER_01: 20:54

I need to print annual reports, I need to read the physical books, the physical newspapers. Uh so yeah, I don't know. I'm young but old school.

SPEAKER_02: 21:04

Yeah, I'm not too different to you. I'm not I'm yet to jump on the Kindle. I think when I'm on when I'm on a flight, you know, especially on an international flight, and I've got, you know, eight, ten, twelve, or twenty-four hours. If we head over to Europe to kill, I'd much rather read a a book, a hardcover book, than than have a Kindle. Um maybe one day I might uh uh adopt the uh new way of reading, maybe if print completely dies, but I don't think it ever will. Um and then what about you? You mentioned on the way as we're walking in, you played tennis on the weekend and you're quite competitive. Are you do you follow any sport? Is sport of interest to you?

SPEAKER_01: 21:38

Yeah, I mean, obviously, whenever the tennis or during the Australian Open, I sometimes head down, have a look at who's playing. Um, I love playing tennis weekly, so I play weekly. Um that's probably and I play a little bit of golf, so golf and tennis. Um look, I'm not I'm not a big sports head, but but you know, I do enjoy uh watching good games, and I you know I have to admit I in the AFL I do go for Collingwood, so you might love me or hate me.

SPEAKER_02: 22:08

I'm a Collingwood supporter, so we have something in common, which is good. Sienna's looking over right now as a Calton supporter, shaking her head, but that's okay, Sienna. That's okay. Um, and then obviously we're both from Melbourne, and coffee's a big part of Melbourne. I I I've I asked this question a lot, what's your what's your go-to coffee order? Are you a coffee drinker, first of all?

SPEAKER_01: 22:29

Yeah, I am. So well, I get up pretty early. Up I get up between 5 to 5:30, and I normally make myself a double espresso with my own uh espresso machine. Um, and then I have a quota of two coffees a day, and then normally I I just get a three-quarter latte um from the local cafe at work, but yeah, quota two a day. Uh, because you know, I'm I'm one of those people that caffeine does affect them.

SPEAKER_02: 22:57

Yeah.

SPEAKER_01: 22:58

Um and any anything more, it's it just doesn't work for me.

SPEAKER_02: 23:01

Yeah, I think we have a lot in common. I'm the same. Um, I'm up at five normally. Uh, like to go for a run first thing in the morning or to the gym, and then you know, it's it's uh two coffees maximum. Otherwise, you know, when I try and go to bed at nine o'clock, I'm looking at the scaling, which is ceiling, which is not ideal. But uh, thank you, Vaz. I appreciate you coming in and sharing a bit about your career and and what you do. That's great, and also about you know, Common Street Asset Management and uh and the value fund. And congratulations on your career today and look forward to um you know keeping an eye on the fund and and how the business continues to grow and perform. So thank you.

SPEAKER_01: 23:35

Thanks, baby.

SPEAKER_02: 23:36

Cheers. Thanks for listening this week. Stay tuned for our next episode and keep up to date with us by following the Finance Friends podcast on Instagram and TikTok. Plus, connect with us and our guests over on our LinkedIn page, all linked in the show notes.

SPEAKER_00: 23:58

Disclaimer This podcast exists for informational and entertainment purposes only. The personal opinions of the speaker and guests do not represent the view of any other party. If this recording contains reference to financial products, that reference does not constitute a guide nor recommendations and may not be relied upon.