John Sevior Quotes
112 John Sevior Quotes
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[In August 2005 on his investing.] It's an investment philosophy we've used for 20 years, and there are periods where it struggles, particularly where there's a speculative air to the market, and we've had better years. We had a reasonable year last year. The last six months were probably a struggle, probably our toughest period since the period running into the peak of the tech boom. In those types of markets, there's a lot of excitement, there's a lot of froth, there's a lot of expectation. We do tend to struggle because it's a pretty dull, pretty predictable, pretty basic, common-sense oriented investment philosophy. There's no rocket science behind it. The beauty of it is that it's sensible, and we execute it in a disciplined fashion, so we don't pretend to be winners in all market environments. But it's stood us in pretty good stead over an extended time.
John Sevior
[In August 2005.] I spend 98 per cent of my time managing other people's money, and it's a bit like the doctor managing his own health: I tend to get rewarded for looking after other people's money, and that's what I do, and the rest looks after itself.
John Sevior
[In October 2006.] The market is hot, it is nearly on a high, it is not surprising that we are going to have a bit of a correction and it wouldn't surprise me if it had a reasonable pullback.
John Sevior
[In February 2007.] We've got a simple investment philosophy. We focus on quality of balance sheet, management track record and the whole of the business. The next job is to say, is it good value? Our valuation approach is quite eclectic. Good value is a mixture of things. If it's a conglomerate such as Wesfarmers we might do a sums of the parts valuation. It can be a straight PE (price/equity ratio). In a resources stock we are more likely to do a DCF (discounted cashflow valuation). Increasingly, as the world gets smaller and countries become more consolidated it can be a global peer comparison.
John Sevior
[In February 2007.] One of our worst calls was Aristocrat where we built a decent stake at close to the bottom and got very concerned about what management was doing, and about the balance sheet, and sold almost at the bottom. It was around $2 then, it's now $17.
John Sevior
[In February 2007.] We don't buy stocks with PEs over 20. That's just an outcome
of the way we invest. We tend to attract those companies which can
be a bit out of favour for contemporary reasons - the companies
which get knocked.
John Sevior
[On his investing in February 2007.] It's not rocket science.
John Sevior
[On the three jobs he has done – broking, funds management and financial journalism.] I hated selling. Funds management was the easiest. Investing is my hobby.
John Sevior
[On him starting as a phone clerk on the trading floor of the Melbourne Stock Exchange with Davies & Dalziel.] I used to run the orders to the operators but I got the buys and sells mixed up so they shunted me into research.
John Sevior
[In 1994 on his interview when he joined Perpetual.] I remember the interview vividly. With John Murray and Pete Morgan. We spent 80 per cent of the time talking about One Up On Wall Street, a book by Peter Lynch. We all thought the same thing. You buy a business which you have a sense of. Touch the product, meet the people.
John Sevior
[In September 2007.] We are stock pickers. We invest in a value-biased style, or bottom-up approach, to stock selection. This means we do research on individual stocks and put portfolios together by looking at two characteristics. First, the quality of the business, which means the quality of management, the soundness of the balance sheet, the history of earnings and the quality of the business. The next job is to say: is it good value?
John Sevior
[In September 2007.] We always said we don’t have any skill in forecasting outlooks. We try to pick stocks. But we have found it hard to find value in the past 12 months.
John Sevior
[In September 2007.] We have had pretty ordinary performance in the past year because the market has been so expensive. But at the end of the day we think common sense prevails.
John Sevior
[In March 2008.] The thing about investing is that it’s dynamic and while you have an investment methodology that’s rooted in fundamentals and common sense and sound principles, you have to be flexible enough to know that there has been a quite fundamental change in an operating environment. That’s where we think the bank environment is at the moment which is why, even though prices have come down 30-odd percent and at face value the valuations look attractive, there’s still enough uncertainty for us to be cautious.
John Sevior
[In October 2008.] If you divorce yourself from the noise and the headlines, I think the outlook for the Australian share market is pretty reasonable, certainly better than it was 12 months ago when there were very high valuations and a lot of euphoria.
John Sevior
[In October 2008.] I think Warren Buffett commented as cleverly as anyone as he did the other day, he said it's the most fearful environment that he's seen in his investing lifetime, and he's been doing it for 50-odd years.
John Sevior
[In October 2008.] A time of fear is actually a time of opportunity, as perverse as it sounds, and it's quite hard to stomach the volatility, and there has been a lot of volatility. But fear provides opportunities, and there are quite broad-based opportunities in the Australian market, certainly much better than it was 12 or 15 months ago. It's just you need a little bit of courage to do it.
John Sevior
[In November 2008 on Fairfax Media.] We like to have sustainable balance sheets probably more than we like high dividends… We're operating in unusual times, so pragmatism and prudence should guide the company's actions.
John Sevior
[In November 2008 on QBE buying four companies for $1.2 billion.] This is a continuation of their opportunistic approach to bolt-on acquisitions. At face value it looks cheap.
John Sevior
[In February 2009.] You have cash rates at very low levels. And even making some dire assumptions about company dividends, there's still a positive advantage in shares over cash. So that is a positive, weighed up against the negatives of uncertainty. But the market is down 50 per cent. And there's more light at the end of the tunnel than certainly there was three or four months ago.
John Sevior
[In February 2009.] If you want to hold one mining stock, BHP would be it.
John Sevior
[In June 2009.] We have had a rapid charge out of the blocks as people realise that the end of the world, the death of equities, whatever, has passed.
John Sevior
[In November 2009.] There are more inefficiencies, more mispricing the further down the market cap ranks you go. Most of the time the bigger stocks tend to be more efficiently priced than some less-explored areas of the market.
John Sevior
[In November 2009.] You could say that about our whole approach. Conservative, boring, dependable, buy it. As long as the valuation is all right. A lot of the smaller companies we own – like Premier, GUD, Breville – they’re all boring companies, there’s no sexy story but there’s a good sound business, sensible management and pretty strong balance sheets. They’re some of the important factors to me.
John Sevior
[In November 2009.] My own sense is that value is clearly much harder to find than it was six months or even three months ago. My sense is that the market is actually quite fairly priced. It’s not cheap, it’s not super expensive, because there’s going to be rebound in earnings.
John Sevior
[In February 2012.] Unfortunately, spin is increasingly used in business to explain poor performance… Maintaining the status quo is far more lucrative now than it ever has been.
John Sevior
[In September 2012.] Investment is so psychologically challenging because you have got to sell when everyone is exuberant, that’s hard. And you have got to buy when the lights are flickering, when it is on the way out, and that is psychologically challenging as well. It is hard to find people who have the right [judgement].
John Sevior
[In September 2012.] The market looks as good a value as it was at the bottom of the market in March ’09.
John Sevior
[In September 2012.] It’s a great time to start a new business. I don’t think I have seen so many cross currents or so much bad news coming from different angles in my entire time of investing.
John Sevior
[In September 2012.] Every half-baked expert in the world is telling you that you have got to be in cash or in fixed interest. Equities is a much less-loved asset class than it was five years ago, so I think the stockmarket actually is not a bad place to be.
John Sevior
[In September 2012.] There are 300 (stocks) in the index so there is plenty of scope to really pick the eyes out of it.
John Sevior
[On liking the banking sector in September 2012.] It is in such a strong position in Australia.
John Sevior
[In September 2012.] It is going to be quite a bit tougher to beat the market (index) in the next 10 years than it has been in the last five. There is less and less room to differentiate yourself. A lot of industries are under structural threat – media, retail, steel, any kind of manufacturing - and that was a big section 5 to 10 years ago by market cap, revenues and profit. The market is getting very narrow. Banks and resources account for nearly 70 per cent.
John Sevior
[In September 2012.] Look at commodity prices against long-term trend, they have run two or three standard deviations above trend and are now coming back towards trend. Second or third-tier companies with high cost structures are getting found out. The big companies with long life assets continue to be profitable. But it has been a once in a generation boom and some of the heat is naturally coming out of it. It is more of a play on the cycle now than individual companies.
John Sevior
[In September 2012 on his new fund.] It will be a very concentrated, long-only fund.
John Sevior
[In September 2012 on not believing that stock-pickers have had their day.] If you had been in the right stocks in the GFC you would have saved yourself a lot of money.
John Sevior
[In September 2012 on wearing an old blue sweatshirt with a hole under the arm when moving into new office.] I am the bloke who wears everything that is falling apart.
John Sevior
[In September 2012 on so bad news coming from different directions.] Usually in that kind of environment there are opportunities.
John Sevior
[Whilst at Perpetual having a shareholding only to have management knock back a takeover at $32/share and then to see them slump to $12.50.] Every conversation with Orica management for years after that was tinged with resentment about their lack of engagement there.
John Sevior
[In September 2012 The best part of the job is meeting management and talking about the business and seeing the way they handle themselves. You learn a lot from the body language.
John Sevior
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