Transcription of Finance News Network Interview with Altrinsic Global Advisors Portfolio Manager, Rehan Chaudhri
Lelde Smits: Hello I’m Lelde Smits for the Finance News Network and joining me today from Altrinsic is Portfolio Manager, Rehan Chaudhri. Rehan welcome to FNN.
Rehan Chaudhri: Thank you very much.
Lelde Smits: Could you start by introducing Altrinsic. Where are you based and where do you invest?
Rehan Chaudhri: Sure, we’re based in the metropolitan New York area in Greenwich Connecticut; we have offices in London, Toronto and Sydney. We have $11 billion in assets and we invest globally regardless of geography.
Lelde Smits: So when was Altrinsic founded and how is your team structured now?
Rehan Chaudhri: Altrinsic was founded in the year 2000 and we have 10 investment professionals who scour the globe for the best opportunities. So we’re unconcerned about whether the opportunity might be in China, in Australia, in Europe or the United States, we’re just looking for the best discount to intrinsic value.
Lelde Smits: And could you detail how Altrinsic identifies investment opportunities with this philosophy?
Rehan Chaudhri: Yes, we’re looking for a long term opportunities in two types of companies. First type of company might have a good dividend yield, good ROE, a good stable return, could be like a Pepsi or a Diageo for scotch. Second type might be a bit more cyclical, such as an Anglo American (LSE:AAL) or possibly in the past we have owned Australian mining names like Rio Tinto Limited (ASX:RIO) or BHP Billiton Limited (ASX:BHP).
Lelde Smits: So Rehan with a focus on global listed equities, how does Altrinsic survey the global investment landscape?
Rehan Chaudhri: Each senior analysts has between 15 to 25 years of experience and many of them have worked in their industries. I have worked in the industrial sector; my colleague was a molecular-biologist. So although we’re industry focused, we’re just looking for the best ideas so that we can buy a biotech company in the US, or a cancer drug producing company in Switzerland, or a generic producer in China. So from our perspective, we’re just looking for the best opportunities that we can identify. It does require a fair amount of work; we do meet about 1,400 companies per annum, although we’re only buying 25 or 30 new stocks. And part of that is just to distil our on the ground due diligence and doing research.
Lelde Smits: And what’s catching Altrinsic’s attention at the moment?
Rehan Chaudhri: At this point, a lot of opportunities are appearing. In Europe in particular, the financial crisis has taken down listed equities quite far, but there are some great names that are coming down as well. So companies like Nestle, Diageo - great global names that are actually very emerging markets focused, but just happened to be listed in London. Additionally there are great healthcare names like Roche, Novartis; leaders in oncology in the cancer science are trading at 10 times earnings, great dividend yields. So from that perspective, there’s a crisis that is creating amazing opportunities.
In the commodity space in particular, we’re quite interested in agriculture. Agriculture is quite supply constrained, there is only about roughly less than one month of corn on a global basis right now. In 1986 there was over nine months’ worth of corn. So whenever we have floods in different parts of the world or drought, it creates a super spike. So we deal in fertilizer companies around the world and palm oil companies as well.
Lelde Smits: And what is your current assessment of global markets. Where should investors be looking for opportunities?
Rehan Chaudhri: There has been a fair amount of volatility in the markets. So because of that, safety names are actually getting somewhat more expensive. So names that might be a bit more cyclical, some more commodity orientated names, energy or technology are beginning to show signs of increasing long term value.
Lelde Smits: And in which regions does Altrinsic have the greatest exposure?
Rehan Chaudhri: At this stage we are quite overweight Europe ex the banks. The banks we feel will require quite a bit of capital, so probably doesn’t suit our style where we look for strong balance sheets. And then in Japan as well, but maybe these names might be emerging market orientated names listed in Europe and Japan.
Lelde Smits: And which sectors are you focused on in those regions?
Rehan Chaudhri: Those regions we do have high quality multinationals, Nestle, Heineken, Diageo. We do also brand names like Suzuki Motors and names like Anglo American Xstrata, maybe names that are a little bit more commodity orientated as well.
Lelde Smits: So where has Altrinsic made or lost money over the last quarter?
Rehan Chaudhri: Over the last quarter technology was particularly difficult and some of the more defensive names like healthcare, names like Roche or Novartis in Switzerland did very well.
Lelde Smits: And Rehan could you give us an idea of the profile of an investor that puts money with Altrinsic?
Rehan Chaudhri: Most of our investors have been institutional; they have a much more long term orientation when looking for the best risk adjusted returns. We are opening up to the retail investors as well, in Australia in particular, and most of the investors would be investors that have a three to five year time horizon, because that’s where we can capitalise on our extensive on the ground research, finding the best ideas.
Lelde Smits: And what are some of the factors you think are likely to have a big impact on Altrinsic’s performance this year?
Rehan Chaudhri: Of course the macro economy could remain very volatile, so that might actually have the biggest ancillary effects; Europe in particular is going through a significant crisis. But many of our companies have strong balance sheets and we feel that they can survive and when we look out three to five years, we are quite bullish.
Lelde Smits: Rehan Chaudhri, thank you for your insights.
Rehan Chaudhri: Thank you.