Veteran stockpicker sticks to script with strategic sign off

Veteran fund manager John Sevior says that after three decades of stock picking, his key lesson is the importance of sticking to an investment process rather than trying to make big calls on the overall market.

Sevior, one of the best known fund managers in Australia, on Tuesday announced he was retiring from Magellan’s Airlie Funds Management, which manages $9 billion, to be succeeded by his long-time colleague Matt Williams.

In an interview alongside Williams, Sevior said it was time for a change, and he was fortunate to be able to hand over to Williams, with whom he has worked for 24 years. “It’s just time to do some other things,” Sevior said.

Sevior said the key investment lesson he had learned over the decades was the importance of sticking to a strategy, highlighting “the folly of trying to make market calls”.

“A far more repeatable path to success is… developing a process that gives you a better chance of winning more often than not, and sticking to that,” he said.

Sevior said funds management was “a game of wins and losses,” and the single biggest win in his career occurred at Perpetual, when the fund invested in Rinker, a building materials company, which had been spun out of CSR and was unloved and forgotten by Australian investors. A Mexican cement maker bought the company at the market peak of 2007, shortly before the turmoil of the global financial crisis.

“We had a bit of a role in extracting a higher price than the original bid, and I think we made pretty much a neat $1 billion for clients,” Sevior said.

At the other extreme, he said a key regret related to an investment in APN News and Media from around the same time. Sevior said he’d suffered an “unhealthy dose of hubris” and tried to push private equity bidders trying to buy the company to stump up more money. They declined, the bid lapsed, and then the GFC arrived, sending the shares tumbling.