Aided by “complexity and fear”, the family office-style fund manager Manikay Partners has bought into the privatisation of the Tel Aviv Stock Exchange. It’s the best sort of business, like a royalty stream, says Shane Finemore an heir to the famous trucking family company.
Shane Finemore, the managing partner and CIO of Manikay, which invests about US$160 million of the family’s money and more than $3 billion in total, told the AIMA Australia Forum in Sydney on September 12 that growing up in a trucking business family taught him many lessons about business. Business was what was discussed all the time around the dinner table at the family home in Wagga Wagga, the discussion usually led by his father Ron Finemore.
“Trucking businesses are very tough,” he said. “They are capital intensive with low margins.” He also learnt a lot from the race track. The race track was a good place to learn about investing because it was “all about price”.
Interviewed by Paul Chadwick, the retiring chair of AIMA Australia who has been elected to the organisation’s global board, Shane Finemore, said the very best businesses provided royalty streams. Stock exchanges had high returns and also provided network effects. With the Tel Aviv exchange demutualisation, Manikay bought 19.9 per cent and organised another 50 per cent for its clients. The clients were offered the deal first. “We could have sold it 50 times over,” he said.
Finemore joined the broking firm of Hattersley and Maxwell after leaving school and then joined the old DBSM, which became UBS. He started going to the US in the 1990s for business and saw that, while Australia was a great place for business, America was 20 times the size. “You should go where the money is,” he said.
Manikay, which he founded in 2008 with Russell Aboud, who has been his business partner for about 30 years, is a highly concentrated value manager, investing in between eight and 12 stocks.
“We find a very small number of mispriced opportunities that we can understand. We may make only one or two decisions a year. How many times can you have an insight? Why would you want to put more money in your 11th best idea? Complexity is our friend. Complexity and fear.”
Manikay has 20 staff in three offices – New York, Sydney and London – and nine partners. Finemore said that while the period from about 2001 to 2006 represented the heyday for investment banking, he got sick of the large institutional environment. David Lowy and Goldman Sachs helped him start Manikay. With a small firm you can set the culture, he said, and decide the firm’s core values. “We have a long-term philosophy and that’s a cultural thing that we bring to the table.”
The conference, the largest of its type on the Australian calendar, attracted an audience of about 400.