Performance Review 2006
Charles Firmin-Didot: “Performance was mainly driven by the selection of Chinese and Indian companies in the portfolio.”
Performance Review 2007
Charles Firmin-Didot: “For large parts of the year the fund broadly performed in line. Towards the end of the year the financial crisis started to impact performance of many of our small mid-cap stocks due to investors’ sell offs.”
Performance Review 2008
Charles Firmin-Didot: “The worst performance in Talents’ history. Around 50% of the companies in the portfolio were holding companies of our entrepreneurs. The discounts to NAV exploded to around 50% which were highest levels historically – mainly explaining the relative underperformance.”
Performance Review 2009
Charles Firmin-Didot: “Many of the small mid-cap stocks that we held and kept despite their hammering in the previous year rebounded.”
Performance Review 2010
Charles Firmin-Didot: “Out performance on the back of solid performance from our largest convictions supported by our selection of emerging market entrepreneurs.”
Performance 2011 - Year-to-Date
Charles Firmin-Didot: “The year started off well and recently a similar situation to 2008 can be witnessed. A sell off of small-mid cap stocks, discounts to NAV of holding companies close to their highs again”
Performance since 2006
Charles Firmin-Didot: “Over longer periods, entrepreneurial companies outperform. Since the launch of the Talents global strategy in 2001 we outperformed the MSCI by 89% and of end June 2011. The time frame since 2006 now includes two major financial crisis’s that impact small-mid cap companies and in particular entrepreneurial holding companies more than the broader equity markets.”
Investment Process and Strategy – How does the Fund Manager invest?
Charles Firmin-Didot: “Bottom up stock picking process: We have developed an intimate knowledge of successful company founders and CEOs. Since 2000, we have been gathering a database of more than 4,000 companies worldwide. We believe that knowing the people behind one’s investment is essential, and even more when investing in Asia and other emerging markets.
We filter the most promising names out of a universe of 4,000 entrepreneur-led companies based on a “Talents Score” given to each entrepreneur. This score encompasses variables such as the ability to lead, consideration for minority shareholders, and the ability to anticipate or survive a crisis. After taking into account stock valuation and momentum, liquidity as well as market catalysts, we build a portfolio that comprises approximately 70 stocks."
Investment Outlook
Charles 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.
My objectives for the coming 3 to 5 years: up 100% way beyond 2007 highs. I must admit that I am optimistic in nature. 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."
