Transcription of The Stock Network Interview with Teaminvest Private Group (ASX:TIP), CEO Andrew Coleman
Lel Smits: Team Invest Private Group is an ASX-listed investment house spanning education and advice, funds management, and direct equity ownership. It’s focused on disciplined capital allocation and long-term value creation across its portfolio of medium-sized businesses, operating across multiple segments, TIP leverages, its investor network research capabilities, and active ownership model to identify opportunities and navigate evolving market conditions. I’m joined today by CEO Andrew Coleman to discuss how macro trends are shaping capital allocation, growth opportunities, and their portfolio strategy.
Andrew, welcome back to the Stock Network. Now, we’ve just seen a very sharp pullback as you would have seen across equities with resources being very hit hard, also volatility and energy prices that are pushing inflation risks higher again. How is TIP leaning, how is TIP really becoming more aggressive on deployment or more selective with capital?
Andrew Coleman: Warren Buffett famously said you want to be fearful when others are greedy and greedy when others are fearful. So our eyes have been lighting up, which may be a little bit of a macabre thing to say given the true general problems that this is causing around the world. But as an investor, and whether that’s in private businesses in our private equity arm or listed companies in our funds management arm, the best time to buy businesses are when wonderful businesses are on sale and they only get on sale when there is panic and fear. So from that point of view, we’ve been conserving cash for a while, now we’re in the fund stage of deploying it.
Lel Smits: Excellent. I certainly understand that strategy and have heard that very valid quote before. But with markets that are correcting a macro uncertainty vacuum focus, investors, as you know, tend to shift their behaviour, even if the rationale goes against that.
What changes are you seeing across your investor network right now? And also how is TIP positioning to capture that shift in investor behaviour or thinking?
Andrew Coleman: So I think there’s two big themes at the moment that are worth considering from a broader perspective. I mean, the first one is just simply, there was always going to be something, we didn’t know what the catalyst was going to be, but there was always going to be something that was going to create a snapping back to reality of PE ratios. You know, for the last few years, and I’ve spoken about this with you before, there’s been a real bifurcation of valuation.
Certain companies around the world have been trading on astronomic earnings or revenue multiples and others on anemically low rather than the more traditional Gaussian or normal distribution you’d expect. And so history tells you that there was always going to be something that would snap that back to reality, that companies on very high PE ratios or earnings ratios were going to come back down. Those on very low ratios were going to go back up.
And I think that’s all we’re seeing play out in the market right now. That turmoil and volatility is as much just a natural snapping back to the mean than it is any actual fear associated with certain industries. I mean, you know, whilst oil has huge impacts on many things, it doesn’t really affect, for example, a seller of homes as a platform.
And yet we’re seeing REA Group and global platforms snapping back just as much as we’re seeing anything else. So that’s the first theme. I think the second theme is that none of this is really new. You know, I mean, we sort of live through periods and think that our period is unique and that’s lovely. But, you know, we were all born into a war in the Middle East. We were all at school when there was a war in the Middle East. We were at university when there was a war in the Middle East. We started our careers with a war in the Middle East. And today there’s a war in the Middle East.
So from that point of view, whilst this one is the newest iteration of that saga, this isn’t new. And so as an investor, long-term investor, that gives you huge amounts of an edge because you can just simply look through that cycle and say, well, this is just another one of those. It might have more profound impact in certain ways.
And you’ve got to model that. But in reality, the world goes through these cycles of euphoria and fear, strength and weakness. And if you buy wonderful businesses at reasonable prices, they do well regardless of the cycle.
Lel Smits: Absolutely. And can you give us an example, perhaps, of some of those wonderful businesses, either in the past or now?
Andrew Coleman: I think at the moment there are some really interesting opportunities on the ASX. I mean, obviously, CSL has been talked through a lot.
And that clearly is one that can be discussed. But I think if you want to look a little broader than CSL, ResMed right now, which is, of course, a medical device manufacturer and medical device software company, is now trading on below the market average PE for a company growing at a double-digit growth rate for 30 years. That doesn’t make sense in the context of Iran or oil, but it makes sense from the perspective of snapping back of PE.
So that’s now probably quite a buy where in the past it wasn’t. Supply Network is looking quite good at the moment. REA Group I mentioned before. Objective Corp. I can keep going on a list. I’ll probably bore everyone.
But effectively, what we’re saying is companies that are growing strongly, who are unaffected by this global turmoil or will only be affected at the margins, if you can pick those up for teams, PEs or high single digit PEs, how wrong will you go in the long term? And I think that’s the question we all have to ask ourselves as investors. On the other hand, if you’re buying very high PE companies or highly leveraged companies or companies hugely exposed to commodities, yes, this is a more worrying period. But again, I would say wait 18 months.
You know, commodity cycles, as we know, go roughly every 18 months, high to low. So you’ll get another opportunity.
Lel Smits: Well, I appreciate your insights from Team Invest Private Group, Andrew, and look forward to hearing more at the TIP conference, which is occurring next month.
Andrew Coleman: Looking forward to seeing you there.
Ends