David Pace is a portfolio manager at Greencape Capital. He previously spent 13 years at Merrill Lynch Investment Managers where he ran the MLIM High Conviction Strategy from its inception until April 2006.
Greencape: Established in August 2006 by David Pace and Matthew Ryland.
Experience: 13 years at Merrill Lynch Investment Managers (MLIM), where I ran the MLIM High Conviction Strategy from its inception until April 2006.
Investment philosophy: Broadly, our philosophy is based around our qualitative assessments of the ability of management teams and/or business models to add or destroy value over time. The execution of the process relies heavily on our targeted and focused company visitation program.
One of your best calls: Map Airports has been a great performer for us over the past 12 months. This is a business that is a direct beneficiary of the ongoing structural heartache experienced by airlines (ie, falling real airfares, ongoing liberalisation of global routes and the massive investment in wide bodied craft such as the A380 – all good for passenger numbers).
Combine that with a best of breed management team that is very focused on delivering shareholder value, and you have yourself a solid investment thesis.
Outlook for the year ahead: We typically don’t take strong macroeconomic views. Instead we prefer to have a portfolio full of compelling bottom-up ideas. Broadly speaking, though, I think a muddle-through scenario is most likely as we navigate through the inevitable consequences of ‘kicking the economic can’ down the road.
Fund positioning: The portfolio is heavily tilted towards stocks where a substantial portion of earnings growth is micro-managed and under the direct control of the management team. This can come in many forms, including successfully executing on the integration of a recent acquisition, or a compelling market-share story based on product differentiation and management excellence.
