Success and More Interesting Stuff

How Olev Rahn helped Bankers Trust survive the 1987 crash (and how he sees markets in 2024)

In 1987, Olev Rahn was pounding the streets of New York's financial district, meeting with Wall Street's best strategists. Rahn, who was running BT Financial's institutional business Pendal, felt distinctly uneasy about the exuberance gripping financial markets. It felt like a giant bubble, and the deeper he dug, the more convinced he became that a reckoning was just around the corner.

Rahn's instincts proved spot on as markets cratered on what has since become known as Black Monday. Combining put options and futures selling saw BT breeze through the '87 crash while others crumbled. From that moment, BT was the main game in town. Billions flowed into the coffers, and it was the number one place to work in Australia. Rhan remained key until BT Australia was sold to the principal group for 2.1 billion in 1999.

In this episode of Success and More Interesting Stuff, Rahn discusses the growth of BT Financial in Australia, the key figures that were instrumental in building the firm, and how the firm navigated the 1987 crash. Rahn also shares his views on markets in 2024 and why he is happy to have some cash at hand.

 

Time stamps

• 0:00 - Introduction
• 3:10 - Early life and leaving Estonia
• 8:15 - Developing an interest in economics
• 9:49 - An opportunity with Ord Minett and the XYZ method of research
• 15:13 - A move to London on the back of booming markets
• 20:03 - A call with Chris Corrigan and bringing active management to Australia
• 25:05 - Good performance leads to rapid growth Keating
• 30:41 - Kerr Neilson and Jillian Broadbent join BT as it becomes a powerhouse
• 34:15 - 1987 and the era of corporate excess
• 38:54 - The strategies Olev Rahn used to protect BT from the crash of 1987
• 42:00 - The signs of exuberance prior to the 1987 crash
• 47:39 - A golden era for Bankers Trust
• 50:00 - Olev Rahn’s views on markets in 2024

How ’The Speculator’s Diary’ got Ben Griffiths got hooked on small caps (and why he thinks we’re in a ’pause rally’)

Every year,  fund manager Eley Griffiths invites stockbrokers from across the country to a lavish dinner. In the cutthroat world of the share market, stockbrokers rarely get treated by their clients. Eley Griffiths, the $1.2 billion small company manager known affectionately as EGG, is a rare breed.

The fact that EGG is currently celebrating its 20th year is a testament to the value that everyone contributes to the process of grinding out returns in the volatile small company market. It is a deliberate strategy and reflects the founder's personality. 

Ben Griffiths is a 30-year-plus veteran of the market. The son of a comedian, Griffiths has always loved an audience, and appreciated their participation in the show, whether it be the speech at the annual dinner, or the day-to-day process of picking stocks.

 

Leaving school, Griffiths found himself on the trading floor of the ASX. He's old enough to remember the 87 stock market crash. From this came many lessons, including a desire to switch to funds management. He found a home as a dealer at Mercantile Mutual and was planted in the middle of a treasure trove in the form of Greg Matthews, David Paradice, Peter Mellett, and John Morgan. He progressed from dealer to analyst, and then portfolio manager. At the turn of the century, he had a brief stint at BT where he worked with Brian Eley, and before long the two had hatched a plan to form EGG and do it their way.

Looking back over 20 years, there were some difficult times. The first 12 months were a real grind, and then years later, Eley became seriously ill before passing away in 2018. Through all this EGG has moved forward with Griffiths at the helm. In the 20th year, the group is branching out into the mid-cap fund. No doubt there are plenty more returns, and broker dinners to be had.

Time stamps

• 5:00 The highs and lows of 20 years in small caps
• 9:50 The powerful role of Ben Griffiths’ grandmother
• 13:15 Working on the trading floor in the 1980s
• 20:15 His move into institutional broking
• 26:40 “A richer training ground you could not have hoped for”
• 32:00 A “blank sheet” opportunity at BT
• 42:30 Reflections on Lehman Brothers’ collapse
• 48:00 The loss of Brian Eley
• 52:00 His market outlook for 2024.

Graham ‘Skroo’ Turner shares the highs and lows of Flight Centre and his 50 years in travel

Graham "Skroo" Turner grew up in splendid isolation. His family owned an orchard in Southeast Queensland, and he rode a pushbike to school, which was so small it only required one teacher. Even when he went to university, he avoided humans and decided to study vet science.

Skroo, now seventy-four years old, still sits atop of Flight Centre (ASX:FLT), Australia's largest travel agency, which operates in twenty-four countries. He is the fearless leader of thousands of employees and has a unique management technique that has allowed the company to scale well beyond its humble beginnings.

While Flight Centre was officially born in the early 1980s in Australia, its predecessor, Top Deck, kicked off in 1973, dreamt up over a beer with some friends at Oktoberfest in Munich, Germany. The Top Deck story is legendary in Australian corporate history, with Skroo and his clan driving buses out of London to all parts of the globe, including Afghanistan and Morocco.

He was back in London a few weeks ago to celebrate the 50th birthday of Top Deck and enjoy a beer with some of the old crew who shared his sense of adventure.

Skroo has come a long way in the 50 years and has run into a few potholes and even roadblocks. There was 9-11, The GFC, and of course the COVID-19 virus that induced a near-death experience for Flight Centre. Somehow he has battled through and still seems to enjoy it. In fact, not much has changed. He still looks and sounds like an orchard farmer from Queensland, retaining his laid-back manner that disguises an entrepreneur with a mean competitive streak.

In this episode of Success and More Interesting Stuff, Turner talks about growing up on a farm, how he began his career in tourism, his unique approach to management as well as the highs and lows of Flight Centre’s journey.

Time stamps 

• 0:00 - Introduction
• 1:50 - 50-years since the launch of Top Deck
• 4:56 - Growing up in isolation and breeding a sense of adventure
• 8:59 - Travelling through Europe sows the seeds of a travel business
• 16:10 - The first Flight Centre stores and rapid growth
• 24:20 - Flight Centre lists on the ASX
• 26:08 - The ‘Families, Villages and Tribes’ approach to management
• 30:43 - Don’t sweat the small stuff and the alchemy of growth
• 34:56 - The enormous cost of COVID-19 for Flight Centre
• 40:26 - The future for airline travel in Australia
• 46:08 - Making Flight Centre relevant for young people
• 47:42 - Succession

The CEO who kicked the incumbents to the curb (and delivered investors a +4000% return in the process)

It's been just over a decade since Andrew Alcock took a risk on a small up-and-coming investment platform. The gamble has certainly paid off. Since joining the firm in July 2013, HUB24's (ASX: HUB) share price has skyrocketed around 4200% - turning an ASX-listed microcap into a market-leading 30-bagger. 

In the early months of 2013, HUB24 was on its knees. The company experienced a boardroom battle, an emergency capital raising, and a lack of leadership. Born out of the stockbroking outfit InvestorFirst, the company was losing millions of dollars a year and its future was doubtful.

The boardroom bloodbath saw founder Otto Buttula depart, and Bruce Higgins installed as the new chairman. The company looked externally for a fresh start - and a CEO who could bring new ideas and a large dose of optimism. 

In a bold decision, they landed on Alcock, an unknown quantity to the listed market. At the time, Alcock was running the AMP-owned planning group Genesys Wealth Advisers.

HUB24’s share price in July 2013 was hovering around $1 a share and the company had just posted a loss of $9.7 million with funds under advice of just $479 million. Alcock obviously knew the industry better than most and saw a bright future for HUB24.

Fast forward a decade and things have changed. HUB24, along with its close rival Netwealth, have ushered in a new breed of financial platforms, leading the charge against the incumbents – MLC, BT, and ironically, AMP. 

Today, HUB has over $80 billion in funds under advice and in FY23 it booked a net profit of just under $60 million. The company’s share price trades at around $33 with a market capitalisation of $2.8 billion.

Alcock who, as a youngster on Sydney's North Shore dreamed of playing the keyboards in a band, has clocked up 10 years in charge of HUB24 - and he believes the next decade looks even brighter for the investment platform. Along with his right-hand man Jason Entwistle and a burgeoning team, there is a belief that the surge towards the top of the charts will continue.

In this episode of Success and More Interesting Stuff, Alcock openly shares his inspirational journey to the top, some of the challenges along the way, as well as some of the exciting initiatives for HUB24 in the future. 

Note: This interview was recorded on Thursday 23 November 2023. 

Timecodes

• 0:00 - Intro 
• 2:01 - HUB24's recent record-breaking results 
• 3:34 - A deep dive into Andrew's beginnings 
• 4:40 - Andrew's two early ambitions: medicine and music 
• 5:50 - Life growing up on Sydney's North Shore in a family of six kids 
• 10:10 - Bible college, marriage at 21, and the beginnings of a career in tech
• 14:40 - How Andrew was introduced to the finance industry 
• 17:24 - Andrew's first gig as a CEO (and why he is all fight, no flight)
• 21:15 - A foray into financial advice at Genesys Wealth 
• 22:54 - On what attracted him to take the opportunity at HUB24
• 28:53 - The first few months in the role 
• 32:21 - How the industry has changed since then 
• 34:22 - On the benefits of having a rival in Netwealth
• 35:44 - Why it's important to have a vision (but set realistic goals along the way)
• 37:43 - The Royal Commission into misconduct in the banking, superannuation and financial services industry (and the beginnings of a "revolution" at HUB24)
• 40:23 - The attributes of a good leader 
• 44:59 - What keeps Andrew up at night 
• 47:18 - On Bruce Higgins's retirement from the chair of HUB24
• 49:04 - What investors can expect from HUB24 over the next decade
• 52:50 - How HUB24 is using AI to improve efficiency for advisers and investors 
• 55:38 - How investors should measure HUB24's success 
• 58:32 - On coming out publicly and the importance of being authentic

Stick to your knitting: Anton Tagliaferro’s secret to high conviction investing

Anton Tagliaferro grew up in Malta, playing football and studying with the dream of someday becoming a doctor. This was pushed aside, however, when political unrest in his native country led him to leave for London, where he ended up studying accounting. 

 

Soon after graduating, Anton discovered the world of funds management and was hooked on the idea immediately. Through taking advantage of chance opportunities, Anton was able to migrate into an equities manager role, where he began building a personal brand as a reliable investor.

After receiving encouragement from clients, Anton struck out on his own and founded Investors Mutual Limited in 1998. The timing put Tagliaferro and his team at the formation of the tech bubble.

"We set up, and the first six months things were going ok. And then the tech boom comes along," he recalled. 

Bolstered by a background in accounting, and some unorthodox methods of avoiding the pressures of the crowd, Tagliaferro avoided falling into the common pitfalls of Dot-com stocks. 

"Every single piece of rubbish with technology in the name was running, and all the while every decent company was being sold down," he said. 

This led to several years Anton described as the most brutal in the business, as indices bloated with overvalued tech stocks, leaving his value portfolio in the dust. He persevered, however, and when the tech bubble eventually burst, his fund's fortunes flipped and would end up drastically outperforming the market overall.

This demonstration of high conviction investing, in the face of much criticism, built Tagliaferro and IML a reputation in the market, and their funds under management grew accordingly.

Recently, Anton has been able to move into retirement, which he now spends contributing to the development of soccer in Australia. That being said, he still keeps an eye on the markets and hasn't ruled out a return to the industry.

"If I was starting a boutique fund manager today, and I might start one next year, I haven't decided yet, I'd focus on international equities," Anton said. 

"I think the Australian market - the amount of superannuation, the amount of money chasing a handful of stocks... it's such a concentrated index - and if you look at the quality below the top 20, I've gone through it a thousand times, I'm still going through it, and you take out the REITs and resources, there are very few good quality industrials in Australia." 

In this podcast, Anton shares his origin story, his serendipitous journey into funds management, and the challenges he has faced along the way. He also provides his view on the current market landscape and opens up about his plans for the future. 

Timecodes:

• 0:00 - Introducing Anton
• 2:12 - Growing up in Malta, early career path through accountancy
• 9:10 - Getting a start in London
• 13:36 - Coming to Australia
• 16:17 - Grabbed by the stock market
• 18:25 - How do you get into Funds Management
• 21:00 - Lucking into an equities manager position at Perpetual
• 28:50 - Perpetual launches a fund
• 31:25 - Move to County and lessons from institutional investors
• 34:20 - Investing philosophy
• 37:00 - "It's time to set up your own thing"
• 39:25 - Hardest time in Anton's career
• 41:45 - Collapse of the tech boom
• 45:20 - What drove performance
• 50:15 - What's the state of markets at the moment
• 56:26 - What's next?

Meet the man who turned Nick Scali into a 10-bagger

Nick Scali is a furniture powerhouse. Since listing in May 2004, the store count has grown from 10 to 107 without having to tap shareholders for additional capital. Who knew Australians had such an insatiable appetite for leather lounges? 

Equally as impressive as store growth are the financial returns investors have enjoyed. Since listing, sales have increased by 1,068%, net profit has increased by 1,407%, and the dividend has increased by 1,263%. From a listing price of $1 to the current share price of $10.79, Nick Scali (ASX:NCK) has been a 10-bagger for shareholders who have stayed the course. 

The driving force behind this impressive story is Anthony Scali, son of founder Nick, an ambitious Italian immigrant who came to Australia in 1955 at just 18. After a brief stint selling televisions in Melbourne, Nick moved to Sydney and opened his first store in 1962 on the Hume Highway in Ashfield. 

Anthony Scali worked in the family business from a young age and progressively played a more significant role in the running of the growing retailer. He officially took over the CEO role when the company was listed on the ASX and says he has no plans on stepping aside and has eyes for further expansion into the UK. 

In this episode of Success and More Interesting Stuff, Anthony talks about the mindset and approach that has created one of Australia’s most iconic retailers. 

 

Time codes: 

 

00:00 - Introduction

01:56 - The Nick Scali advertisements 

02:47 - Slow and steady growth

04:15 - Why investors are cautious on retailers

05:25 - The start of Nick Scali

08:43 - Nick Scali’s business philosophies

12:16 - How Anthony got started in the furniture business 

14:01 - Moving from niche to mainstream offerings

15:31 - Lessons in debt and property 

18:32 - Nick Scali (ASX:NCK) lists on the ASX

20:41 - Passing the CEO baton from Nick to Anthony 

24:07 - Growing the family business

26:21 - The initial plan for store growth 

27:50 - The ingredients for success in retail

35:25 - The Nick Scali niche - quality and value

37:55 - Anthony Scali’s approach to management

40:45 - Anthony Scali sells down some of his shareholding

43:54 - The vision for Nick Scali in Australia and New Zealand

45:49 - Taking the Nick Scali concept to the UK

49:32 - The outlook for the Australian market 

50:57 - Antony Scali on succession planning but no plans to retire

53:45 - Property investments still intriguing, even after the 1990s experience

“It was horrific.” How Robert Kelly overcame adversity to build a $6 billion business

By the time most people reach their mid-forties, they are thinking about an exit strategy for their working life. That was not the case for Robert Kelly AM, who, in 1975, after a series of harrowing business experiences, was dusting himself off and preparing to start all over again.

Kelly is the Founder, Managing Director and CEO of Steadfast (ASX: SDF), the ASX-listed insurance broking firm with a market capitalisation of ~$6 billion. Insurance is a harsh industry where the big players compete on price and price alone. Steadfast, under Kelly’s stewardship, has taken a different path choosing to focus on relationships and networks to win the loyalty of their clients.

“It is sold on relationships and advice. If you keep selling on price, you’re a commodity, just like a cup of coffee. We have a relationship, and the relationship will win through” - Robert Kelly AM

The strategy has proven successful, and Steadfast commands more than one third of Australia’s intermediated insurance market. It appears that the job is not done and at age 76 Kelly recently renewed his contract as Steadfast Managing Director and CEO until 2026.

 

In this episode of Success and More Interesting Stuff, Mathew Kidman explores the highs and lows of Kelly’s business career, including the life-changing advice he received from Rugby League legend Jack Gibson.

Trailer: “It was horrific.” How Robert Kelly overcame adversity to build a $6 billion business

The latest episode of Success and More Interesting Stuff introduces one of the most enterprising and successful people on the corporate landscape. Robert Kelly had a chequered career in the 1970s and 80s that included a failed business, driving taxis and dealing with some of Sydney’s more colourful identities.

In 1996, aged 48 and running his own insurance broking firm, Kelly decided it was time to put the foot to the floor. He, along with some other like minded insurance brokers, thought forming a buying group to help deliver cheaper insurance rates for its members was a good idea. They called it Steadfast.

Most good idea only come to fruition due to tireless endeavour. Kelly criss-crossed the country convincing Insurance brokers they should become a Steadfast member. He was obviously a sharp salesman. From humble beginnings, Steadfast now has over $11 billion of gross written premium from its members and accounts for more than a third of Australia’s intermediated insurance market. The company’s market capitalisation is approximately $6 billion.

Kelly is hardly calling it quits though. At the age of 76, the Steadfast board recently extended his tenure as CEO of the group until 2026. That should give him time to take Steadfast into the US market, a stated objective of the organisation. One can only guess how big that arm of the business will become.

Breaking big stories: Tony Boyd’s Chanticleer playbook

We have a treat for you today. Historically the show has focused on outstanding investors and leading executives. Today, we are delving into the other cog of the share market machine - the fourth estate, or as most of us know it, the media. 

Tony Boyd has been a finance journalist for more than 40 years. The latest 13, he's been writing the preeminent finance column in Australia, Chanticleer. Affectionately known as 'The Chook',  the Chanticleer column has held pride of place on the back page of the Australian Financial Review since 1974. 

The Chook columnists include such luminaries as Robert Gottliebsen, Ivor Ries and Alan Kohler. No one, though, has lasted as long as Boyd. 

Writing Chanticleer is a monumental task. 1250 words on the issues of the day, every day. 

It might sound simple enough, but to be cutting edge and relevant all the time takes an extraordinary person. Not only do you need to know the full spectrum of company issues, but you must talk to the key people involved. Conversations with the top echelon of corporate Australia is only reserved for the respected few. 

Boyd started out as a copy boy at Rubert Murdoch's News Limited. From there, he enjoyed stints in Europe, and Japan, and edited sections on banking and IT. A short secondment to investor relations saw him return to the fourth estate to write Chanticleer in 2010. At the end of March this year, Boyd put down his pen for the last time. 

Tune in to the latest episode of Success and More Interesting Stuff via the player below or through your preferred podcasting platform.

Timestamps

0:00 - Introduction

2:41 - Meeting the demands of a daily business column

7:00 - Early years, education and growing up in Sydney

11:40 - Developing an interest in newspapers and publishing

14:15 - Starting as a copy boy with News Limited

22:22 - A trip to London as a finance correspondent

30:34 - The first time Alan Kohler offered Tony a job

36:06 - A brief career change and the second time Alan Kohler offered Tony a job

39:25 - Tony’s approach to writing opinion and the first time a banker lied to him

42:10 - Rejoining the Australian Financial Review

43:28 - The responsibility of writing Chanticleer

47:05 - The best story Tony covered

49:36 - Interviewing the big names including a run in with Kerry Stokes

54:45 - The role of the Chanticleer column in Australian business

1:01:45 - Closing remarks and the next chapter 

25 years and counting: How this “market animal” has consistently beaten the market

It's been 25 years since the first days of Ausbil Investment Management, and Executive Chairman, CIO and Head of Equities Paul Xiradis is still one of the first to arrive at the office. 

The self-confessed "market animal" lives and breathes investing. But few know the making of X, as he is now universally known. 

The eldest son of Greek immigrants, Xiradis always knew the value of entrepreneurial spirit - having keenly watched his father run several fish shops growing up. While Xiradis admits these years were "never easy", they instilled in him a desire to one day run a business of his own. 

"I was an ok student, I wouldn't say I was outstanding. But equally, I didn't have a lot of time to devote to my studies either. I was helping out the family businesses most afternoons and weekends. In fact, all weekends were spent helping the family," Xiradis recalls. 

"So when I left school, it was an opportunity for me to really excel and work for myself in the sense of achieving my own results." 

And excel he would. Xiradis, unlike many Australian fund managers today, has truly worked his way up the ranks of the industry. He started out as a bank teller and would go on to gain experience in nearly every facet of finance - including personal banking, investment property, equities, fixed income, and broking. 

Unsurprisingly, this early education has shaped the investor Xiradis is today. For instance, during the crash of 1987 (Black Monday), when several of Xiradis' colleagues left him "holding the baby", he grasped one of investing's greatest lessons. 

"I learnt that you really want to be managing the portfolio rather than the portfolio managing you. And what I mean by that is if you are forced to sell, or the liquidity or quality isn't there, it just ends in disaster," he says.

"I have never been able to achieve it since, but I outperformed the benchmark on a 12-month basis by over 30% because I was invested in quality [companies] and no penny dreadfuls."

This focus on quality, on both top-down and bottom-up analysis, has helped Xiradis and the Ausbil team achieve truly eye-watering returns over the past 25 years (his flagship fund has beat the benchmark by more than 2% since 1997) - and has transformed $10 million of seed funding into a nice $15 billion in funds under management today. 

In the final episode of SAMIS, you'll learn all about Xiradis' journey from Bankstown to Sydney's Bridge Street, as well as some of his best learnings from a career of consistently beating the market. 

Time codes

0:00 - Intro
4:19 - Early life
8:06 - Early exposure to business
10:13 - Challenges growing up
12:52 - Unconventional career beginnings
15:50 - Mentors in finance
18:38 - Lessons from the crash of ‘87
24:05 - Striking out independently
30:20 - Early days of Aubil
36:15 - Growing pains of Ausbil
41:32 - Portfolio management lessons
46:17 - Future of Ausbil and Paul