Tim Samway

Award-winning, high-conviction equities fund manager, Hyperion Asset Management (Hyperion), has announced the Hyperion Global Growth Companies Fund has been added to the Macquarie Wrap platform.

The Hyperion Global Growth Companies Fund is run by Hyperion’s long-standing investment team, applying the same proven philosophy and process which has produced consistently strong returns from their Australian equity portfolios for the past 22 years.

Hyperion’s Managing Director, Tim Samway, said: “We’ve received a significant uptick in interest for our global strategy from both Australian advisers and investors – in particular, investors wanting greater exposure to global equities in their search for superior returns in an otherwise low-growth, low-return environment.”

The Hyperion Global Growth Companies Fund is also available to advisers on BT Panorama, BT Wrap, Asgard, Hub24, mFund and Netwealth.

“Hyperion runs concentrated portfolios and this fund is no different. Our individual stock weights are often several times larger than those of our competitors. At Hyperion, we invest like business owners, taking a bottom-up approach that aims to produce superior investment returns for our investors over long-time horizons,” Samway added.

The Hyperion Global Growth Companies Fund has a “Recommended” rating from Zenith Investment Partners. The Hyperion Global Growth Companies Fund has delivered investors a 19.7% p.a. return (after fees) since inception in June 2014 to October 31, 2018, generating 7.5% p.a. above the fund’s benchmark, the MSCI World Accumulation Index (AUD) over the same time period.

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Tim Samway

Award winning high-conviction equities manager Hyperion Asset Management (Hyperion), has yesterday announced that its latest fund, the Hyperion Global Growth Companies Fund (Global Growth Fund) will be open to direct applications from retail investors.

The Global Growth Fund was established in May 2014 with seed money from Hyperion’s investment team. It is run by Hyperion’s, long-standing, successful investment team, using the same philosophy and process which has produced consistently strong returns from their Australian equity portfolios.

The Global Growth Fund aims to invest in the highest quality global companies in developed countries, with the aim of producing medium to long-term growth and income. Since inception, performance has been strong, re-affirming that Hyperion’s bottom-up approach to long-term investing translates successfully to global markets.

Speaking about the Global Growth Fund, Hyperion Managing Director, Tim Samway, said that the creation of an international equities fund was a natural consequence of the fact that Hyperion already has a deep understanding of many international markets.

“Many of the Australian listed companies we invest in derive a significant proportion of their revenues, and more importantly, their growth, from offshore operations.

“As a result we have always done a great deal of research into the global competitors to our domestic stocks, so it seemed like a logical extension to further that research and invest ourselves.

“We’ve had our own money invested for two years now, and we’re really pleased that our investment strategy has been as successful in overseas equity markets as it has in Australia,” Mr Samway said.

Mr Samway went on to explain that investors looking for long-term growth would be wise to consider global equities in addition to their domestic portfolios.

“Global equities offer a wider universe of quality companies, with larger addressable markets which translates into better projected performance and downside protection for portfolios.

“At Hyperion, we invest like business owners, because we believe that well-managed companies with solid fundamentals and structural growth opportunities will outperform over the long term.

Mr Samway concluded by saying that Hyperion’s aim has always been to provide long-term capital growth and income to investors, and that the reality now is that there are more companies to choose from if they expand their investment universe to offshore markets.

“That’s why we’re really pleased to offer retail investors the chance to invest in high-quality global companies with an Australian manager they know, and which has an established and successful track-record in equity investment,” he said.

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Tim Samway

While many market commentators warn that we are in for a bumpy ride in 2016, equities manager Hyperion Investment Management remains calm and sanguine after a sustained period of exceptional outperformance.

In fact, according to Tim Samway, Managing Director of Hyperion Asset Management, investors who continue to focus on quality stocks and an intelligent long term investment horizon have no cause for concern.

Mr Samway described the current volatility and other features of the global market such as commodities slumps and a lower AUD as short term factors that are much less relevant to Hyperion’s investment view than the opportunities presented by companies with outstanding customer value propositions, strong balance sheets and the ability to grow intrinsic value for shareholders.

“Look at our investment environment,” he said. “The fact remains that we have a substantial ageing population of a reasonably wealthy middle class. That spells opportunity. The question for us is, where does that opportunity lie? And the answer is in seeking and predicting much longer term themes that develop over years and change markets for good, not short term cyclical fluctuations like the volatility of the exchange rate or gyrations in commodity prices.”

Mr Samway cited developments such as cloud computing, online fast food ordering and rapid delivery and other tech-related shifts that have fundamentally reshaped whole industries as examples of the profound long term movements the Hyperion investment team anticipates and acts upon.

Some examples of the kinds of companies Hyperion favours are:

• Cloud computing related stocks
• Technology stocks
• Global stocks, which are taking market share away from competitors by presenting customers with a substantially better value proposition (e.g. Dominos)

“We need to look at what’s disruptive and consider what kinds of new technologies and new business models are going to make a difference to their customers. What will their long term effects be? And how can investors capitalise on that?

“For example, Technology One is changing its client base from a software sale to an annuity income stream of higher quality by converting its software to the cloud.”

In further support of the Hyperion position, Mr Samway cited the restricted ability of banks and miners to increase their profits due to low credit growth and continuing weak commodity prices due to low global economic growth.

“If you need any further evidence of the need to look beyond the benchmark and think longer term about investing in the stocks of the future take a look at the top 50 stocks by size. The key challenge for investors is that a substantial number of these companies will struggle to produce anything like an acceptable return. In some case investors must look outside mature industries for future growth,” he explained.

Hyperion is well positioned to make the argument based on its long term performance figures, which are among the best in the market across all timeframes from inception in 1996 to the present. Hyperion has produced a return of 14.41%pa since inception in 1996, which is just over 5% better than the broader Australian market has achieved over that time.

“We are confident that over the next five years, economic conditions point to a sustained, albeit low growth market. Make the right decisions now and you will be ready to reap the rewards,” concluded Mr Samway.

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Tim Samway

Boutique Australian equities fund manager, Hyperion Asset Management, announced that it will close its institutional business to new inflows.

In addition, Hyperion will soft close its retail funds – meaning it will no longer accept new investors into its two flagship equity funds, the Hyperion Australian Growth Companies Fund and the Hyperion Small Growth Companies Fund, although existing unit holders will be able to continue to invest in both funds.

Hyperion’s institutional mandates will be hard closed immediately. The soft closure for retail investors will take effect as at 30 April 2015.

The decision to limit its funds inflow was made as a result of the manager’s continual review of capacity and its unwavering commitment to its investment philosophy.

Hyperion’s Managing Director, Tim Samway, said that substantial investment out-performance over the long-term has driven strong inflows to Hyperion’s funds, with the amount of Australian equities under management recently reaching $5.5 billion.

“This will be our 20th year of operation and over that time we have produced market leading investment out-performance for our clients. As a result, our funds have attracted substantial investor interest. Potential capacity issues are a side effect of such success.

“The best interests of our investors are at the heart of all our decisions. We are taking this proactive approach to limiting total assets under management to safeguard future investment performance for clients. By limiting funds before reaching our capacity we will preserve the concentration of high quality stocks in our portfolios and provide ample headroom for future outperformance and inflows from existing retail clients,” said Mr Samway.

Hyperion’s Australian Growth Companies Fund and Small Growth Companies Fund have achieved total performance, net of fees, of 12.7% p.a. and 17.1% p.a. respectively since inception beating their respective benchmarks by 2.4% p.a. and 10.3% p.a. Hyperion funds are currently ranked 1st and 2ndin the Morningstar Australian Institutional Sector Survey in their respective asset classes over the last 10 years.

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Tim Samway

Despite decades of evidence to the contrary, investment managers and commentators persist in holding a short term view of the market that’s unlikely to be in the best interests of ordinary investors, says boutique Aussie equities specialist, Hyperion Asset Management.

“The recent falls in the ASX are a case in point, with the extent of the interest and concern around short term movements indicating that some investors and commentators are missing the point,” said Tim Samway, Hyperion’s Managing Director.

“And the point is, with very few exceptions – such as professional traders or speculative investors – equities investing is a long term game. Treating it as anything else is one sure way to erode gains, which is the last thing that most Australians, who just want to build a long term, secure retirement, need.”

Mr Samway said that intensified focus on day-to-day stock movements can prevent investors from achieving their long term investment goals. He cautioned both investors and their advisers to make decisions about their holdings on the basis of quality, long term performance data rather than fluctuations which may seem significant on any given day but, over time, may be meaningless.

“The simple fact is that stocks cannot be expected just to rise and rise. The nature of the market is that they will rise and fall. The purpose of sound investing is to ensure that, over the long term, the rises outweigh the gains. Preferably significantly,” he added.

Mr Samway went on to say that the reasons for the current mood of short termism and market navel-gazing were probably many and varied – but that none of them was sufficient on the evidence to divert investors from a long term path.

“Whether it is the shorter news cycle, the increased sensitivity to market news since the GFC, a heightened sense of awareness about superannuation outcomes – or a combination of these factors, the noise that surrounds this kind of unhelpful and often ill-informed market “analysis” remains just that – noise,” said Mr Samway.

“Instead, investors who want a long term, secure retirement should be focusing on strategies that incorporate a robust investment process that will secure long term sustainable returns and preservation of capital. Ultimately this means investing in growing businesses with superior economics, at an attractive price.”

Mr Samway said that the key factors Hyperion looks for are a high return on equity, a proven track record of success, low gearing and organic, sustainable growth.

“What is frustrating about the current climate is that Hyperion’s focus on the long term is one with which most superior investors and commentators agree. So we thought it time to go on the record and call for some calmer, more informed discussion that may even add genuine value to the debate – and to client portfolios – which is surely what we are all here for.”

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This is the view of Tim Samway, Managing Director of Hyperion Asset Management, and he should know.  Hyperion’s portfolios just delivered post February reporting season earnings per share (EPS) growth of 4% for their investors, compared with the market’s -9%.

During a presentation to financial advisers from around Australia, Mr Samway said that the Hyperion investment team’s focus on a company’s fundamentals is the key to achieving alpha in a low growth, low yield economy. 

“When you consider the massive deleveraging we have seen across the economy, interest rates at historically low levels and staying there, not to mention falls in commodity prices, it’s no surprise that many companies have struggled to sustain earnings growth,” he said. “But at Hyperion we look for companies with growth drivers that are independent of cyclical factors.”

“Earnings growth is definitely number one,” he explained, “but if you can identify companies which also have predictable earnings growth, you can protect your capital as well.”

“At Hyperion, we have a few golden rules that inform our investment decisions. We look for companies that grow earnings above the growth in GDP and have pricing power in their markets, because this is a lever for growth. Finally, we look for an ability to grow market share, which in turn relies on a strong value proposition.”

Mr Samway said that the market in general has little or no exposure to structural growth stories and that as a result, Hyperion’s portfolio differs substantially from the index.

“For example, we have strong positions in a number of companies taking advantage of the secular shift in traditional retail and advertising dollars to online.  These stocks represent 26% of our portfolio versus the market’s 0.5% and they haven’t disappointed, producing profit growth in the double digits,” he said.

“And shareholders should be heartened to see company management able to increase dividends per share, indicating their confident view of the future.”

Mr Samway finished by saying that Hyperion’s house view is that equity markets continue to be undervalued.

“In addition to our retail stocks, we are also overweight non-bank financials. We believe that double digit growth is sustainable over the long term, provided you focus on the fundamentals. Our expectation is that top line growth is key, as the market can’t expect to continue to rely on cost savings alone.”

“The Hyperion portfolios have demonstrated that they can deliver sales and earnings growth in a subdued growth environment, independent of cyclical factors. Our long term view and focus on not cutting corners in our research and investment decisions has produced great results, and the long-term outlook for the portfolio remains attractive”, he said.

Last month Hyperion was nominated in three categories and won in two including being named as Domestic Equities Category Winner in the Morningstar Awards 2013, Australia.

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This is the message Hyperion Asset Management’s Managing Director, Tim Samway, delivered during his keynote speech at a series of luncheon presentations for financial advisers that are taking place in all major cities around Australia throughout December.

According to Mr Samway, this new investor outlook is seeing a shift away from cash and other non-growth assets as investors seek both good returns and preservation of capital.

“When investors are in ‘fear’ territory, they tend to stay overweight in cash.  However, as investors seek more volatile asset classes like equities they must look for the quality stocks,” said Mr Samway.

But according to Mr Samway some investors are likely to still be distracted by short-termism, a tendency for investors to shorten the evaluation periods.  Something that Mr Samway says is a killer of investment returns.

Mr Samway went on to explain that the key to providing both growth and capital preservation is due diligence. “The focus on due diligence for capital preservation rather than trusting diversification puts quality investing in a different league.  At Hyperion our unique investment philosophy and process takes a bottom up approach to investing and allows us to identity high quality companies that will always outperform over the long-term.  There is no substitute for quality.”

Mr Samway continued, saying that in order to pursue quality this means ignoring the benchmarks which are made up of poor quality businesses.  The key, he says, is to focus on the less mature companies which offer better growth in earnings.

By way of example, Mr Samway cites quality companies such as, SEEK, REA, Carsales.com, Trade Me and Domino’s Pizza.

“Around 25 per cent of Hyperion’s portfolio is invested in companies that are exploiting the secular transfer of sales from traditional forms to online.  Their valuations are above market but we think that the drivers of their long term growth have not been fully appreciated by the market.  There is also opportunity for market re-rating in the future but more importantly there is the opportunity for these companies to continue to deliver 20%+ earnings per share growth,” said Mr Samway.

Mr Samway suggested that the wealthy would be the early movers when the markets recover.  Referring to the phenomenon where gamblers take greater risks with their winnings (referred to as the house money) compared to the risks they will take with their original stake.

He noted that, “The house money effect kicks in after a period of market recovery.  Investors are happier to take more risk when they are making gains from their initial financial starting point.  Investors with more money and a smaller gap between their goals and their present financial situation will be the first to play with the house money when the markets recover.”

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The ‘Highly Recommended’ rating indicates Lonsec’s conviction that the Fund can achieve its objectives and, if applicable, outperform peers over an appropriate investment timeframe.

According to Hyperion’s Managing Director, Tim Samway, the rating reaffirms Hyperion’s reputation as a high conviction fund manager that delivers returns above the benchmark for clients.  

“We’re thrilled to receive Lonsec’s highest rating for the Hyperion Australian Growth Companies Fund for a third consecutive year. It underlines Hyperion’s excellent track record and is positive affirmation for our well-developed unique investment philosophy and process,” said Mr Samway.

The Lonsec report noted that the Fund has a solid long term track record, returning an Excess Return of 1.92% pa and 2.90% pa over the five and seven year periods assessed to June 2012 (outperforming the Lonsec peer average in both instances). 

The report went on to state that the Fund’s ability to outperform in both rising and falling markets was an impressive result for a growth style manager (which would normally be expected to perform more strongly in rising markets), and likely reflects the emphasis on identifying quality franchise and business strength in Hyperion’s research process.   

In its review of the Fund Lonsec also endorsed Hyperion’s strong investment team, reporting the overall quality and experience of the team was a key factor in reaffirming the Fund’s rating.   

“Our focus has always been to generate high alpha investment returns based on a bottom-up investment process which identifies quality companies through rigorous research. But our process is only one part that contributes to our success; the other is the strength of our investment team.  To maintain the ‘Highly Recommended’ rating from Lonsec is gratifying for the team; it’s pleasing to have our hard work and long-term investment out-performance for clients acknowledged,” said Mr Samway

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Sixteen years after he founded Hyperion, Pohl is handing over the reins in order to establish and grow Hyperion’s new private equity business as well as focus on Hyperion Flagship Investments Limited and the individually managed accounts service. 

Tim Samway, currently Hyperion’s Institutional Business Director and a founding shareholder, has been with Hyperion since start-up, driving growth of the firm and its successful institutional investor and financial adviser relationships. In stepping into the role, Samway will ensure continuity of the firm’s strategy, investment process and team. His previous roles included senior management and board experience at Hyperion, Wilson HTM, Burrows and Deloitte. 

Hyperion Asset Management’s strong investment team is unchanged. Leadership of the investment team remains with both Chief Investment Officer (CIO), Mark Arnold and Head of Australian Equities, Joel Gray. Arnold and Gray are shareholders and have been key members of the investment team for 14 and 11 years respectively. Arnold will chair the monthly Investment Committee meetings in addition to his role as CIO. 

Hyperion Asset Management Chair Ms Beale said “One element of Manny’s legacy at Hyperion Asset Management is the development of a stable and high quality team of investment and business management professionals. There will be no changes to Hyperion Asset Management’s investment team, philosophy or processes as a consequence of Manny’s departure. 

“There will be a smooth leadership transition to Tim, who knows the Hyperion Asset Management business inside out. He has earned the respect and support of Hyperion’s Board, clients and the investment and operational teams. Ian Harrison remains in his role as Chief Financial Officer.” 

As the transition between Pohl and Samway is effected, Pohl’s shares will be redistributed in the coming year to existing shareholders including Mark Arnold, Joel Gray, Justin Woerner and Tim Samway as well as new shareholders Portfolio Manager Jason Orthman and CFO Ian Harrison. This is consistent with Hyperion’s philosophies of ensuring alignment with clients and long-term succession planning. 

“Manny Pohl’s vision and energy laid the foundations for Hyperion’s enduring success and strong investment performance as a high-conviction growth-style manager. His skills in starting and building businesses are evident from Hyperion’s track record as a boutique asset management firm successfully managing portfolios of high-quality Australian companies and gaining investor support,” said Ms Beale. 

“More recently, Manny has increased his focus on areas of new business development, including private equity. Mark, Joel and the investment team members have progressively taken more responsibility for the investment process and decision making. 

“After a review of Hyperion’s strategy it became clear that the new business initiatives should be separate from Hyperion Asset Management ensuring the current asset management business concentrates on its core strengths of serving Australian institutional clients and financial advisory firms where our competitive advantage is clear. This transition is a formalisation of that structure,” concluded Ms Beale. 

Manny Pohl said “Hyperion has been a great success story in the local asset management industry. I am proud of what we’ve achieved – exceptional investment returns since inception and developing a business that today manages in excess of $3.2 billion for institutional, financial advisers and high net worth clients. It’s a stable business, grounded in hard work and a highly disciplined investment process. I am equally excited about the new businesses which I can now pursue with focus.” 

Tim Samway said “Manny is leaving Hyperion Asset Management in fantastic shape. Hyperion is widely respected in the industry, most recently evidenced by winning the 2012 Morningstar Fund Manager of the Year Domestic Equities – Small Caps award. The team and I are committed to leading the next phase of Hyperion Asset Management’s development and growth through serving our valued Australian clients.” 

Mark Arnold added his support for the change. 

“The Investment Team and I are fully supportive of the model where the asset management function is separated from the day to day running of the business. Tim has strong management and operations experience both before Hyperion and during the past sixteen years when he has been Acting CEO during periods of Manny’s absence. The new structure means we can all play to our strengths,” he said.

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