MAGELLAN - In The Know

With one of the toughest of investment years - 2022 - now behind us, it’s time to look at the road ahead, its tailwinds and potential pitfalls. In this new year episode of Magellan in the Know, Head of Listed Funds Jennifer Herbert discusses the landscape in 2023 with Magellan’s Global Portfolio Managers Nikki Thomas and Arvid Streimann. With the abrupt rise in interest rates probably now behind us, and with a slowdown on the horizon, they outline Magellan’s investment philosophy of delivering an absolute return over time through thoughtful risk assessment and due diligence on the underlying value of companies. Europe and China may be in the process of emerging from darker times, but some fundamental risks are still apparent, so they say it’s a time to pay attention to sound investment frameworks and stick to them.

In this episode, Ofer Karliner, Infrastructure Portfolio Manager hosts a wide-ranging discussion with three of his colleagues about the travel sector and the associated investment opportunities. Ofer is joined by Ryan Joyce, Sector Head of Technology, Hannah Dickinson, Sector Head of Franchises, and Yathavan Suthaharan, Industrials Analyst. From airlines to accommodation, luxury retail to technology and manufacturing to aircraft maintenance, together they discuss the companies that might benefit from the re-opening up of the travel sector post covid and what risks and opportunities might lie ahead. There are also some fascinating revelations about the way the pandemic has forced these industries to evolve.

Some Asian markets fell right after Chinese President Xi Jinping cemented his position as the most powerful Chinese leader since Mao. President Xi used the Chinese Communist Party’s National Party Congress, which is held every five years, to not only break the tradition of maximum ten-year terms in office, but he also removed supporters of his more open, market-oriented predecessors from the key policy making body. John Garnaut, founder of investment advisory firm Garnaut Global Joins Matt Pottinger, a Distinguished Visiting Fellow at the Hoover Institution, to discuss the implications of Xi's indefinite grip on power on the outlooks for businesses, the economy and international relations.

It’s a time of crisis, but, as Albert Einstein once said: “in the midst of every crisis, lies great opportunity.” A negative supply shock in Europe has seen global energy prices soar and has forced governments to scramble for alternatives to safeguard their national security. According to Portfolio Manager David Costello and Magellan Head of Macro and Portfolio Manager Arvid Streimann, shifting attitudes are pushing the market toward alternative, renewable energy sources, resulting in the most influential investment thematic of the next 30 years. They say that, although some infrastructure legacy issues will be remain, this current energy crisis will actually result in a more secure, and electrified, future, and a gradual decrease in prices over time.

One of the USA’s largest power generation and gas distribution firms, WEC Energy Group supplies electricity to 4.6 million customers — including some of the country’s biggest manufacturers — across Wisconsin, Illinois, Michigan and Minnesota. The company has delivered attractive and consistent returns as part of the Magellan portfolio for more than ten years. WEC Energy’s Executive Chairman, Gale Klappa, says the power provider should see growth thanks to a huge expansion in demand that will stem from the green energy revolution. Gale Klappa explains how embracing renewable technologies and diversifying generation methods can deliver the three things desired by shareholders, regulators and customers: affordable, reliable and clean energy.

Diageo, the world's leading producer of distilled spirits, has experienced compounded revenue growth of over 9% p.a. by focusing on 'drinking better' rather than more. The CEO emphasizes the company's obsession with consumers and efficiency, and believes there is room for further growth. They discuss their investment case, sustainable value creation, marketing strategies, investment in data and analytics, and commitment to sustainability and social responsibility.

The future of the 21st Century could be decided in the coming months. That’s the view of Secretary Leon Panetta former US Secretary of Defence.  Secretary Panetta speaks to Magellan’s Head of Macro and co-Portfolio Manager of the Global Equity Strategy, Arvid Streimann, about geopolitics and the challenges for democracies globally. It is a wide-ranging and thought-provoking interview about the place in history in which we find ourselves.

The world’s largest payment network, which facilitates more than 6000 transactions every second, is in the front seat of the digital payments’ revolution . VISA has enjoyed a doubling of its volumes in many regions over the past three years, thanks to the increased uptake of digital payments across the world. VISA Vice Chair and CFO, Vasant Prabhu, says his company’s primary mission to replace cash and cheques with digital payments is gathering pace, with huge opportunities still to come. In this episode, Vasant is interviewed by Magellan Deputy CIO and Head of ESG, Domenico Giuliano, and Magellan Portfolio Manager Elisa Di Marco,  about VISA’s attractive and innovative business, the way the pandemic has multiplied volumes, and the implications of new payment options like crypto currencies, electronic wallets, real-time payments, and the impact of regulation.

Infrastructure investment is a long-term activity, so it pays to identify areas of potential and start talking to governments early. That’s the methodology employed by Scott Charlton, who is the CEO of the world’s biggest toll-road operator — Transurban. Scott outlines how the company concentrates on areas of growth in the three markets where it has a competitive advantage, namely Australia, the USA and Canada. In this podcast episode, Scott Charlton is interviewed by Magellan Infrastructure Portfolio Manager, Ofer Karliner, and Head of Infrastructure Gerald Stack, about Transurban’s way of doing business, as well as the opportunities and challenges that lie ahead.

Identifying underappreciated quality businesses, as well as keeping an eagle eye out for diamonds in the rough, underlines the approach of one of the industry’s leading Australian Equities players: Airlie Funds Management, a business that Magellan purchased in 2018. John Sevior has a long track record of managing funds on behalf of individuals, superannuation funds, public institutions and charities. In this episode, John is interviewed by Bryce Leske and Alec Renehan from the Equity Mates podcast (one of Australia's leading financial media brands popular with younger investors) about his overall approach to investment, current market conditions, and some of his favourite examples of underappreciated, high-quality companies.