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On this episode:
Steven McCarthy is Portfolio Manager at DMX Asset Management.
Steven is a qualified CPA and a passionate value investor. Prior to DMX, Steven spent time as an expert company valuer working on mergers and acquisitions, and in insolvency.
Steven is known for his investments in high-quality small companies on the Australian stock exchange. We spend some time talking about his journey to finance, his investment beliefs, philosophy and process, as well as some of the most common mistakes small company investors make.
At the end of the episode Steven answers my favourite question with one of the best answers so far.
Please enjoy this conversation with Steven McCarthy of DMX Asset Management.
- 0:45: Intro to Steven
- 1:30: what car does Steven drive?
- 2:15: Steven’s passion for finance and free money from the NZ government!
- 4:00: Life in insolvency
- 5:00: The world of valuations, investment banking, private equity and expert reports
- 7:00: Steven’s actions and investments during the GFC
- 8:45: What is DMX? An old trash business?
- 10:00: Leaving a high-paying job to go out on his own
- 12:00: Steven’s DMX investment process, filtering techniques and why micro caps?
- 15:00: Does small-cap mean risk? Steven doesn’t think so.
- 17:30: DMX’s investment beliefs
- 19:00: Is management quality the most important factor for value investors?
- 21:00: Investors undervaluing simplicity
- 23:00: How Steven values businesses — realistic assumptions
- 25:30: Why does he sell?
- 26:00: Where will Steven and DMX be in 5 years?
- 27:00: One thing would tell a younger him about investing
- DMX – Risk-Adjusted Returns
- DMX – The Power of Management Incentives
- DMX – Why Investors Under-Value Simple Businesses
- Sensation Seeking and Hedge Funds (academic paper)