Growing up with three older brothers with a penchant for roughhousing and hustling for money around the family pool table requires grit.”I learned pretty quickly how to deal with sharks, if you like,” Richard Ivers, a portfolio manager with Prime Value Asset Management, jokes.
“It’s probably a good thing growing up, but it wasn’t easy at times. My brother won silver at the Australian taekwondo championships and was a blackbelt heavyweight, he wasn’t a pushover.”
While not having much exposure to business in his household, Ivers’ budding appreciation for financial markets took off after exchanges with a close family friend, stockbroker Michael Nolan.
“I started to realise that if you work in financial markets, you have exposure to lots of different business models and that’s what really excited me,” Ivers says.
“I didn’t even understand the role of stockbrokers or fund managers until I had that insight from Michael; he really opened my eyes to the opportunities in financial markets, for which I’m very grateful.”
Armed with an appetite for understanding the ins and outs of how businesses work, Ivers went to study at RMIT, graduating with a Bachelor of business, majoring in accountancy.
Following university, brimming with youthful exuberance he cut his teeth working with stockbrokers and research analysts at Burdett Buckeridge & Young. Under the watchful eye of a media analyst, the first company he followed was News Corp.
Ivers says it was great because at that time News Corp constituted a big chunk of the broader Ordinaries Index and Rupert Murdoch was still very active, doing deals around the world.
Within a year, he started covering companies himself as well as working with elite media analysts.
“I started covering the regional television networks, newspapers, and radio businesses, all really high-quality businesses back in the 90s before the internet came in and disrupted them all,” Ivers remembers.
Ivers looks back with great fondness on his early career and feels privileged to have conversed with the senior management teams of many media businesses. Equally, he relished talking to clients, which were fund managers, learning a great deal about how they invest.
Held in particularly high esteem, Ivers cites Pengana Capital Group’s Steve Black and Ed Prendergast as two standouts that, aside from being high quality people and smart investors, are individuals whom he’s learnt much from.
Likewise, despite being competitors now, he praises Paradice co-head of Australian Small Caps Adam Harvey for sharing his funds management wisdom with him.
After three years of stockbroking as an analyst, Ivers was bestowed an opportunity to leave Melbourne for Sydney, his company dangling the carrot of a promotion to become head media analyst.
However, albeit an offer seemingly too good to refuse, ultimately, he was dissuaded.
“I would’ve been 24 years old, and I thought either I’ll travel now or won’t get to ever again,” Ivers says.
“I’ll be working huge hours and doing a great job, but I’ll never have a chance to travel internationally. So instead of going to Sydney, I went overseas. Originally I planned on staying for a year, it ended up being eight years.”
Temporarily drawing a line through stockbroking, Ivers set forth to Europe, living in both London and Amsterdam. While abroad, he worked in a range of financial strategy roles at IBM, Intergraph [now Hexagon] and NatWest Bank.
“I sat on the other side of the fence from markets,” Ivers explains.
“In the markets you often think businesses work a little bit like a spreadsheet, but I learned working inside these businesses that they are much more organic. For example, how good salespeople can have an influence on the revenue line.”
Ivers returned to Australia in 2005, working his way back into financial markets as a small cap analyst at Ord Minnett. After seven years, one of his clients lured him to join River Capital as a portfolio manager, his first move out of stockbroking and into funds management.
River Capital is like Prime Value in that it was founded as a family office organisation that accepts external money and focuses on absolute returns and capital preservation. Ivers credits the fund as having a lasting impact on how he chose to invest and think about stocks.
Later, he linked with fund manager Contango Asset Management, which was backdoor listed on the ASX after it underwent a management buyout led by James Packer and Robert Rankin.
Shortly after Packer cut ties with Contango in 2017, Ivers moved on to Prime Value, responsible for its small cap fund, the Prime Value Emerging Opportunities Fund.
The fund has topped Mercer’s Australian Small Companies (ex-ASX 100) survey for return over three years to 31 July 2022. Over this period, it delivered a 14% annualised return, crushing the comparable Small Ordinaries Accumulation index that returned 2.6%. According to Mercer, the fund’s return after fees is also in the top quartile on a one-year basis for each of those three years.
“It’s got the highest performing investment returns but it also has one of the lowest risks in the sector by measurement of standard deviation or volatility,” Ivers says.
“This unusual combination of really good returns and very low risk is something we’re really proud of, even if the risk side of things doesn’t get a lot of attention.”
Ivers credits his team members, portfolio manager Mike Young and equity analyst Ben Mellody, for their stock picking consistency.
“We look for quality businesses that can grow, a little like the tortoise and the hare approach,” he says.
“We’re trying to get good consistent returns over time, not trying to shoot the lights out.
“We don’t invest in businesses that are loss making; not interested in lottery ticket type businesses where you could get really high returns but lose all your money.”
The fund also doesn’t use an index as a benchmark. The team doesn’t care what the biggest and smallest weightings of a benchmark are, rather it’s entirely focused on what’s the best investment.
It’s their view that not having an indexed benchmark removes all temptation to focus on reducing risk of underperformance versus an index. Ivers wants investors to view the fund as an investment portfolio of high-quality companies, not an investment in “the market.”
Hugely optimistic about his team’s potential, Ivers enthusiasm for the future is perhaps only rivalled by his enduring passion for financial markets.
“As a fund manager, you have exposure to a huge number of different businesses and the opportunity to speak to their leaders, which I find is a really privileged position,” he says.
“I’m really lucky to be in that role, to be able to converse with these people and have them explain to me and my colleagues what drives the business, how it’s going, what’s going to determine its future.
“It’s almost the perfect job for my interests, but also growing up with brothers who were a bit tougher, and a sister who was really nice, it’s a competitive environment and I enjoy that part of it as well.”
https://www.financialstandard.com.au/featured_profile/healthy-competition