Luke Cummings – Arbitrage
On this episode:
Luke Cummings is the Chief Investment Officer and Co-Founder of Harvest Lane Asset Management, a funds management company which focuses on ‘special situations’.
From a business perspective, Luke has been very successful in a relatively short period of time. As a teenager, he mingled with some of Australia’s most highly regarded investors, before rising quickly through the ranks at eTrade and has since co-founded two businesses.
Luke emphasises some important lessons about working hard and taking calculated risks. His investment philosophy is relatively unique in Australia but while it may seem complicated, Luke distills the key tenants very well throughout the episode.
If you’re new to the world of hedge funds or merger arbitrage and think you may need to brush up on some key terms to get the most from this discussion please visit this page, where we’ve created a free short course addressing the key ideas discussed in this and other episodes.
Please enjoy this conversation with Luke Cummings of Harvest Lane Asset Management.
- 0:45: Intro to Luke & Harvest Lane
- 1:30 – Where did it all start for Luke?
- 3:45 – Time at Platinum?
- 4:45 – Rich Dad, Poor Dad. And profit without effort?
- 5:45 – Favorite board game is Monopoly
- 6:45 – Job at Platinum? With no uni?!?
- 8:45 – Was Luke buying shares at a teen? There are no shortcuts in investing.
- 12:15 – Luke gets a job and works hard to get promoted
- 14:15 – Luke becomes the youngest-ever “broker manager” and is handling all sharemarket trading… before he turns 21!
- 15:00 – Online trading opened up the door to everyone… but it wasn’t all roses
- 15:45 – A customer turns $50k in $10m then loses it all in the Dotcom crash
- 16:30 – Luke establishes a successful stock broking businesses at 25 and there’s another twist…
- 22:45 – The business is funded with credit cards… and it brings out the investment strategy he uses today
- 28:00 – Harvest Lane collects a performance fee only?
- 31:45 – Protection against smart beta funds and low-cost investing
- 35:45 – What is merger arbitrage and ‘special situation’ investing? What are some of the common risks? (plus someone is stacking plates in the background??)
- 40:45 – Why merger arbitrage appeals to Luke
- 44:25 – Does Luke have to wait for a deal to be announced? How does he value it? Luke uses the 6 month low as the worst case.
- 45:45 – Sirtex and some other good outcomes
- 55:00 – How do Luke act quick enough?
- 1:00:15 – Is merger arbitrage a worthwhile strategy for retail or DIY investors? Does Luke use specialists?
- 1:05:00: Good books and resources
- 1:07:00 – What Luke would tell a younger him about money and investing
“It’s cost zero money to be a good person”
- Joel Greenblatt – The Little Book That Beats The Market
- Trade Your Way To Financial Freedom
- Market Wizards