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On this episode:
Ben McGarry is the Founder of Totus Capital.
The Latin word for Totus means absolute. It’s a fitting name because Ben is now one of Australia’s leading hedge fund managers, having been thrust into the spotlight following a number of high profile sell-offs and collapses, such as ABC Learning.
Upon graduating from UQ with a commerce degree, Ben went to work at a large accounting firm to master his technical skills before moving to London to start investing.
In this episode, Ben talks about the experiences that shaped his investment philosophy before going into detail on the key things he looks for when short-selling Aussie companies.
Ben and I talk at length about business, big economic issues, some infamous corporate events and the success of Totus to date.
Given the nature of our conversation, if you’re new to the world of hedge funds or need to brush up on some lessons please visit this page, where we’ve created a free short video course addressing some of the concepts discussed in this and other episodes. Putting aside a few minutes to understand the key terms will mean you get a lot more from this and future episodes.
This is a rare chance to learn from one of the sharpest thinkers in the game, so I trust you’ll enjoy this conversation with Ben McGarry of Totus Capital.
- 0:45: Intro to Ben & Totus
- 2:00 – What got Ben excited in finance and investing?
- 3:30 – Ben’s first share: Carpenter Pacific – now he steers clear of gold shares
- 6:00 – Ben moves to London to start his investment career
- 7:00 – Ben’s focus areas in Europe were long-only building and construction research
- 8:30 – Small cap concepts that “don’t work”
- 9:50 – Ben writes a research report/note on ABC Learning that propelled his career (LINK TO IT?)
- 12:50 – Still no shorting, despite saving his fund tens of millions of dollars
- 14:00 – Why start Totus and go out on his own? He wanted to be a portfolio manager.
- 15:00 – Ben suffers through a year’s worth of compliance and legal stuff to start a fund with just $300,000.
- 17:00 – It didn’t end there, Ben’s salary kept disappearing
- 18:00 – Ben’s long-short strategy and the themes he looks for in Australia and US
- 20:30 – Shorting Australia’s East Coast housing market
- 22:00 – How did Ben start shorting shares? Was he using derivatives?
- 24:00 – Ben’s 3 Sins of Investing
- 26:00 – Would Ben invest in a fund that the fund manager didn’t invest in?
- 27:00 – What is Ben looking for in “Quality” companies. 1 aggressive accounting trick and what he avoids. Plus acquisition accounting and adjustments
- 30:00 – How does management buying and selling impact Ben’s investing? Why he owns Flight Centre, Beacon Lighting and Facebook
- 32:00 – How and why did Ben bet against Blue Sky Asset Management (BLA) and what tipped him off?
- 34:20 – Ben’s opinion on short selling and asks ‘is it fair that short sellers cannot release their reports and criticise management?’
- 37:00 – Ben’s fund has done better than the market in 8 of the 10 worst months. How?
- 38:00 – Should everyday investors short stocks?
- 40:00 – Why does Totus invest in the USA’s blue chips and not Australia’s?
- 42:00 – Ben’s performance and risk go hand-in-hand
- 44:00 – Where will Totus be in 3-5 years?
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