How Francesco turns a zest for life into a return for his investors
ALTHOUGH fund manager Francesco Conte has been running investment portfolios on behalf of JPMorgan for nearly 20 years, he maintains the passion of a fresh-faced intern looking to impress his employer.
His enthusiasm is driven by an incredible thirst for knowledge. ‘I enjoy learning,’ he says. ‘I travel a lot, meet many incredible people and love what I do.’
It is an endearing personal characteristic that is ideally suited to fund management. His relentless pursuit of facts means he is a renowned stock picker, putting together portfolios that make investors serious amounts of money.
He runs both investment trust JPMorgan European Smaller Companies and its smaller investment fund clone JPM Europe Smaller Companies, assisted by Edward Greaves and Jim Campbell respectively.
The two funds have impeccable performance records generating respective five-year returns of 166 per cent and 133 per cent. The trust’s record is better because unlike the fund clone, it has been able to borrow cheap money and invest it profitably, thereby boosting shareholder returns further. While the two investment vehicles ostensibly invest in smaller companies across Europe, the ‘smaller’ label is a bit of a misnomer as Conte admits. ‘The companies we buy are anything up to a market capitalisation of €5.5billion euros [£4.8 billion]. That means they are big enough to be global leaders but still small enough to grow and generate ever increasing profits.’
Conte’s approach is all about searching for companies which will become – or already are – world leaders in their respective fields. Preferably, he will buy them before their share prices have gone ‘crazy’ and when ‘things are going to get better’ – a result maybe of a new product coming on stream, a new market being conquered or a new boss at the helm. He says: ‘Behavioural finance suggests that businesses – and investors – often underestimate the impact of both good and bad news on share prices. So if you buy ahead of good news, you should fare well as an investor.’
The portfolios of both funds are littered with ‘world leaders’ – a fact that thrills Conte. ‘Yes, a majority of the 60 companies we hold in European Smaller Companies are best in their particular specialisms.’ They include Norwegian recycling company Tomra, a business that is leading the way in ‘reverse vending machines’ – which allow households to return used plastic or glass bottles and receive a refund or return of a deposit.
Other ‘world leaders’ include Brembo, an Italian manufacturer of automotive brake systems, and Husqvarna, a Swedish company leading the way in the building of robotic lawnmowers.
Conte, an Italian by birth, was unfazed by last month’s market correction which saw some European small company stocks fall sharply in value. His view is that it is ‘normal and healthy’ for markets to correct. What excites him more than anything else is the beginning of the fourth industrial revolution – labelled ‘industry 4.0’. He believes the world is on the cusp of great change as automation and the exchange of data revolutionise industries.
Companies such as Tomra, he says, are ideally positioned to benefit. ‘It has machines that will take the fruit from an orange tree and sort them through analysis of their sugar content as to when they will ripen,’ he says. At age 51, Conte is more enthused than ever. Good news for investors.