Value investment management firms that have unique cultural and philosophical structures often get the best results.
Proof of that is the success of Stacey Muirhead Capital Management, a Waterloo-based independent investment management firm, which is credited for its distinct culture. Jeff Stacey, Chairman and CEO of the firm, spoke with Professor George Athanassakos’ value investing class on March 9 about the company’s investment philosophy. He said simple operations allow the firm to serve its customers first and foremost.
“We have a focused investment culture. We’re not trying to be all things to all people, we are doing one thing to the best of our ability,” said Stacey. “We are not the world’s largest investment management firm. We want to keep things focused and simple.”
The company’s investment philosophy focuses on three key areas:
1. A global perspective – The company searches the globe for investment opportunities. Stacey said he believes looking globally is better than confining your reach to a single country. Also, you will find more prospective investments by expanding your search;
2. A value mindset – Inspired by Warren Buffett’s advice to look at stocks as businesses, use market fluctuations to your advantage, and seek a margin of safety, Stacey said he will not let the market control the company’s investments. The company strives for a profit regardless of the stock market. Stacey said he likes the insulation effect event-driven transactions provide because they are dependent on the transactions themselves, not the market; and,
3. A multi-strategy approach – Stacey Muirhead’s multi-strategy approach adds another page to its investment playbook. Its four investment strategies include:
- Long-term investments;
- Event-driven investments;
- Distress credit investments; and,
- Letting money sit in cash or cash equivalent assets.
When investing, Stacey encouraged the students to develop a knowledge base and experience to learn what investments should be pursued or avoided.
“There’s no magic formula. You just have to roll with the punches. It’s important to judge yourself by your own internal scorecard, but make sure you’re a tough grader,” said Stacey. “If you have to engage in huge machinations to decide how close to the line you are, you’re too close! If you go by a tough but honest scorecard it will carry you in life.”
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