Magellan boss, David George, has been busy creating a culture of inclusion where fresh investment ideas are generated from the bottom up and meetings are short and sharp.
It’s a big change from the years when rockstar manager Hamish Douglass ruled the roost. Back in the heady days of $100 billion FUM, Douglass was worshipped as the primary idea machine at Magellan. He idolised Warren Buffet and was described as the “Oracle of Neutral Bay”.
There are two types of people in the business world: those who can start businesses and those who can grow them. Douglass may have started Magellan, but it is now Canadian David George’s job to grow the fund manager sustainably by putting together a team of smart analysts and portfolio managers to work.
“There has been a ton accomplished by this business over time, and there are incredible capabilities that still exist,” the Future Fund alum told Money Management.
“Everyone wants an environment where they’ve got a chance to speak and get their ideas out on the table,” he said. “We wanted to have more interactions more frequently.”
This meant a shift from long meetings to shorter ones with a clear purpose.
“We then move that discussion out onto the floor, around the desks between the portfolio managers and the analysts, and see if we can create a bit more discussion on things that might be interesting,” he said.
This collaborative work environment appears to be paying some early dividends. The Magellan Global fund delivered 15.5 per cent between January and 30 April this year, beating the benchmark by 3 per cent.
“We did make a few adjustments,” George said. “We made what was already there work better, rather than change what was there or change people. So, first and foremost, get as much focus as we could onto the existing strategies, making sure we had idea generation working well,” he said.
“Like a lot of businesses, particularly ones that had been as successful, you become bigger and you become more complicated. It’s just really simplifying that focus to make sure that it had less entrepreneurial attachments and more focus on really making sure that we got the core bread-and-butter, sticking-to-our-knitting work.”
While the fund manager has copped plenty of criticism and heavy outflows in the past 12 months, George believes the business is sound. In fact, he says making adjustments to the company wasn’t particularly hard; it just required a nuanced approach.
“The team has been together a long time. They really understand the core investment philosophies that are in place across the business, and just helping to get that focus going was key,” he said.
“One of the things we’re known for as a firm is deep research. For businesses that are in the portfolios that we own and need to monitor over time, we certainly want to continue with that. But we were also doing that for businesses that were peripherally on the radar, and we wanted to just make sure that we weren’t overdoing it on things that weren’t as central to the portfolio.
“That creates more space for new ideas and the discussions around those new ideas to move through, and a little bit broader coverage for each investment analyst so that they get more context and more breadth of knowledge and opportunity.”
While he didn’t say so directly, there is a sense that egos are checked at the door under George’s leadership. Magellan’s arrogance has been replaced with humility. Watching your share price plummet from $65 to $8 will do that.
As the fund manager looks to an uncertain future, it is building momentum with a different type of energy. One that is team-oriented.
“We can prioritise and triage where the work should go a little faster,” George said.
“I think that’s important for keeping things fresh, but it’s also really important for engaging what is a really big team of really smart people. Bringing that discussion in a lively way actually improves the work environment; it improves the energy of the place, and not that it had to go from one place to the other, but you’re always trying to improve that. I think that’s having its effect.”
