In this latest Meet the Manager profile, Money Management speaks with Ophir Asset Management co-founder and portfolio manager Andrew Mitchell.
Mitchell began his career as an economist in the federal Treasury in Canberra before pivoting to funds management in 2005 as an analyst in the small caps team at Commonwealth Bank.
He then took up his first portfolio management role under the guidance of David Paradice at Paradice Investment Management where he worked for four years.
In 2012, he took the plunge to set up his own business with his co-manager at Paradice, Steven Ng, and launched Ophir Asset Management. The firm now has three equity funds: Opportunities, Global Opportunities and High Conviction.
Read on as Mitchell discusses how he balances management duties with running his investment portfolio and looking for passion in his new hires.
Money Management (MM) : Was there a specific niche you wanted to focus on when you set up Ophir with your colleague Steven Ng?
Andrew Mitchell (AM): There was no particular niche, but we did think there was a different way to run a business. There were lots of small-cap funds out there, but we thought there could be a better structure, better way of going about things where you could have that strong alignment.
Steven and I made the commitment that we would invest all the money outside our house that we live in into the Ophir funds. So we’ve generated a huge amount of alignment. And at this present point in time, the staff who also come on invest a lot of their bonuses into the funds.
The second point is just don’t let your funds get too big and cap the size of the funds. We’ve closed funds because they’ve got too big.
MM: Which role do you prefer, running a business or managing investment portfolios?
Definitely the portfolio management side. I think that this is a big question for fund managers particularly at boutiques as you’re almost a reluctant business owner. If someone is a full-time CEO, then they are just thinking about running the business, whereas I am a full-time portfolio manager and part-time CEO and so is Steven. It’s a big challenge that we’re focused on becoming better part-time CEOs along with running the portfolio which is our true love.
MM: How do you divide up the roles between you?
AM: Steven has amazing attention to detail and is a very detailed, organised person; we have opposite personalities. He’s got an immaculately clean desk whereas mine will have papers all around. Steven really focuses on the compliance side of the business, you can’t get that wrong, and on the operations and making sure people are paid on time, he’s very good at that. I’m thinking about the growth of the business and our hires, I try to think outside the box.
MM: What lessons have you learnt from setting up the business?
AM: I want to see passion from people; passionate people are the ones who do well. Sometimes they may lack in other areas, such as supreme intellect, but they get over that because their passion for what they are doing means they will still find the answer because they work so hard to overcome these cracks, if you like. We want to hire people who want to work in fund management because they love stocks and they have that passion, they want to learn, and they are curious, not because it pays well or their uncle was a fund manager.
In investment, the biggest lesson I think is to just always be humble. The market has a great ability to humiliate you if you ever get ahead of yourself and things always change. You have to hope for the best but plan for the worst. That humility when you’re putting a portfolio together and not thinking that you’re indestructible is a very important skill set and something we want people to exhibit.
MM: How does working as a portfolio manager compare to your former career as an economist?
AM: As an economist, I was working on financial system policy and then financial regulation around banks, but it’s a very imprecise science and it doesn’t really ever work the way you think it will and you always tend to be out in your forecasts. Whereas with companies, you are really trying to get to know them and work out how they are performing now and how they will do in the future. You’re doing a lot of work on the ground, which is similar to what I was doing at Treasury, but it’s a lot more precise.
I’m forecasting companies to million-dollar marks, whereas as an economist, you’re forecasting to a billion-dollar mark. It’s a lot easier to be a fund manger than an economist!
To listen to the full interview with Andrew Mitchell and a range of other experts, you may access the Relative Return podcasts here.
