e-fundresearch: "Mr Firmin-Didot, You are the fund manager of the AXA WF Framlington Talents fund (ISIN: LU0189847683). Since when are your responsible for the fund management?"
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Firmin-Didot: "Since its inception. I launched the Talents entrepreneur strategy in 2000, when I realised that my investments in people were better than those in business ideas. We exclusively invest in companies in which the owner-managers have a significant portion of their own wealth invested into. Our entrepreneurs must at least have a proven ten year track record, be independent, have the freedom to venture into new products and also have their interests aligned with their investors’."
e-fundresearch: "Which benchmark do you adhere to?"
Firmin-Didot: "We use the MSCI World Index for comparison as we have a mixture of small, mid and large companies. The fund doesn’t have to follow the benchmark and we have a different regional split: today we are underweight US, overweight Norway, Asia and Europe or sector split. There are also sectors in which entrepreneurs are more present than in others, i.e. Technology or Retail vs. Oil or Utilities."
e-fundresearch: "Are you also responsible for other funds at the moment?"
Firmin-Didot: "I also manage the Talents Emerging Markets fund."
e-fundresearch: "What is the total volume that you manage in all your funds?"
Firmin-Didot: "Around 350 million Euros as of end October 2011."
e-fundresearch: "Regarding the performance: which performance did you achieve since the beginning of the year and in the years 2006-2010? Absolutely and relatively to the relevant benchmark?"
Firmin-Didot: "The performance in the last 5 years are not as good as the period 2000-2005, as it is when small caps underperformed large caps."
e-fundresearch: "How content are you with your own performance in the last years and this year?"
Firmin-Didot: "We are content as the recent good performance comes form good fundamental results, and not from a higher valuation. As an example our Emerging Markets fund had gone up 100% in 2009, so mid 2010 we started reducing our Emerging Markets names in the global fund. Last year was good as our entrepreneurs announced great results but their stock prices are still way too low, as they often are less liquid companies that are not fashionable right now.
We are confident, that entrepreneurial companies outperform the broader equity markets over the long-term. This has also been shown through external studies conducted by McKinsey and others. Since its launch 10 years ago, Talents Global strategy has outperformed the MSCI World Index by 89% as of end June 2011.
One period in which entrepreneurial companies did under perform was the financial crises in 2008 when markets where not driven by fundamentals but by the hunt for liquidity, a technical phenomenon. As entrepreneurial companies by definition have a lower free float, they were sold off extensively which lead to a slump in performance. A similar tendency was evident in the last 3-4 months. Currently some of our companies trade for less than the cash they have on their balance sheets."
e-fundresearch: "How are you able to deliver added value for your investors with your performance?"
Firmin-Didot: "Talents is the only global and global emerging markets product that exclusively invests in entrepreneurial companies – and hence the only product that is openly available for clients interested in investing into a global entrepreneur portfolio. We add value by selecting the best entrepreneurs around the globe with a proven track record. Thanks to our investment process we offer our clients the opportunity of benefiting from new ideas and innovation created by the entrepreneurs we select and as stated before, the entrepreneurial universe outperforms over the long term."
e-fundresearch: "How long have you been a fund manager already?"
Firmin-Didot: "22 years already!"
e-fundresearch: "What were your biggest successes and your biggest disappointments in your career as fund manager?"
Firmin-Didot: "As a real investor, my biggest successes are around investment discipline and stock picks, not assets under management, even if those went above 1 billion euros in 2007. I don’t do manage funds for a career, but because I need to manage my own assets and didn’t yet see another approach that can offer security and performance over 10 years. The discipline to invest in entrepreneurs that are better than us all was a great move. Unfortunately I made mistakes, often dictated by greed or fear, as all human beings: I bought many Apple shares at $7 per share in 2002 when Steve Jobs returned to Apple. Apple was valued less than the cash it had in its banks, and no one believed in it. Two years later the stock was down 30% and my clients were not sure about Apple but respected the choice and the logic behind it…more important they trusted me as I trusted Steve Jobs. Today Apple’s share is $400, but I sold it 6 years ago around $50… as I thought that it was expensive and I feared a drop… The good thing is that we learn from our mistakes, and we have fine tuned our approach for an even better future."
e-fundresearch: "What kind of capital market situation do we have at the moment? How do you act in this environment?"
Firmin-Didot: "We have a situation somewhat similar to 2008. Many entrepreneurs’ holding companies are less liquid and sold off despite their good fundamental performance. In a situation like this, the best is to stay cold blooded keeping your convictions. We have added to some mid cap names whose share prices have been hammered extensively…and I have bought more shares of the funds I manage on at the end of August 2011."
e-fundresearch: "What are the special challenges in this environment?"
Firmin-Didot: "One of the biggest challenges of the financial markets in general are irresponsible, short term focused actors that do not seem to care about the negative implications of their behaviours : if everyone sells when the economy is slower…predicting the end of banks and governments…then of course it will hurt markets and the broader economy in general.
In Talents we are fortunate with our clients who are here for the long term and understand why entrepreneurial companies can under perform in market environments like this. So the challenge is to stay calm and not to fall into the trap of following short term market trends. In the past we got out stronger of all kraches."
e-fundresearch: "What objectives do you have till the end of the year and in the mid term for the upcoming 3 to 5 years?"
Firmin-Didot: "Till the end of the year, no clue. 3 to 5 years: up 100% way beyond 2007 highs. I must admit that I am optimistic in nature."
e-fundresearch: "Do you model yourself on someone? Any ideals?"
Firmin-Didot: "Yes, but I can’t tell you who..."
e-fundresearch: "What motivates you in your job?"
Firmin-Didot: "To learn from my mistakes, control greed and fear, meet responsible entrepreneurs with values I share, and have investors that understand us and share these values."
e-fundresearch: "What else do you want to achieve or do you have any further aims as a fund manager?"
Firmin-Didot: "Yes, and you will see how we fine tune the approach soon...for even better results I hope, particularly for those like you who look at performance over 5 years...!"
e-fundresearch: "What other profession would you have taken interest in, apart from becoming a fund manager?"
Firmin-Didot: "In the past I planted many trees and bought antique books. I would love to pick the fruits on the trees and to share my passion on the history of writing and typography."
e-fundresearch: "Thank you for the interview!"