New value funds, with spice, and an ESG flavour

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Holowesko Partners, the ‘Bahamian’ global value-orientated manager represented by Andrew Nolan’s ‘Eleuthera’ third-party marketing business, is to launch two Australian-domiciled funds. They will broaden the firm’s presence in Australia and New Zealand, allowing smaller funds to access the firm’s strategies.

‘Bahamian’? That’s someone, or a company such as Holowesko Partners, that hails from the Bahamas. The Bahamas are not just a tax haven. The idyllic setting also houses some serious funds management businesses. Mark Holowesko, the founder of Holowesko Partners, was in Australia last week, mainly on a holiday but also talking to a few industry folks. His global equities firm has a number of big Australian super fund clients.

The two new Australian-domiciled funds will reflect the two flagship strategies of Holowesko Partners – a global long-only equities fund and a global long-short fund. Both have an enviable performance track record. Almost half of the manager’s $US3.8 billion under management is Australian sourced. And, Mark Holowesko said in Sydney last week, roughly 40 per cent of the firm’s assets under management are from related-party investors, such as directors, management and the 20 per cent shareholder Frankin Resources (the parent company of Franklin Templeton). The Franklin Templeton connection is interesting.

Mark Holowesko owes a big debt of professional gratitude to Sir John Templeton, the great value investor for whom he worked in his formative years. Templeton moved to the Bahamas to live in the 1960s. Mark’s family, on his mother’s side, has lived there since the 18th century. Mark joined what became Franklin Templeton in 1985. At the time its main equities fund had a couple of hundred million in it. By the time he left the firm, in 2000, it had more than US$15 billion.

It would seem that Sir John Templeton means a lot more to Mark Holowesko than just being a benevolent boss. Franklin Templeton, for instance, became a big shareholder in Holowesko Partners, with a holding of about 20 per cent. Also, Australia means a lot more to him than just the total of his firm’s Australian clients’ mandates. He has been visiting here for about 30 years, initially working on the Templeton Growth Fund. As a fiduciary investor he has also invested heavily in Australian stocks almost since he joined Templeton.

With Holowesko Partners, Mark wanted to run an independent, majority staff-owned, value-orientated firm which had a focus on providing absolute returns for its clients. This, with key colleagues such as Sean Farrington and John Crone, he has achieved. The staff totals 23, including seven analysts.

Mark Holowesko says that the size of an investment team is not as important as the people’s abilities. “I often think that the best research team in the world probably consists of only two people: Warren Buffet and Charlie Munger (the famous value-orientated investors at the helm of Berkshire Hathaway), he says.”

Andrew Nolan has his own special pedigree. He first met Holowesko when he was attending Georgetown University in Washington, studying for a post-graduate degree, in 2006. Holowesko was a visiting lecturer there. Nolan went on to join Wellington Management based in Boston before eventually returning to Australia, where he joined the leadership team at Warakirri Asset Management before leaving last year to establish Eleuthera. Warakirri, of course, was established by Andrew’s father, John Nolan, of JANA Investment Advisers fame. Andrew Nolan’s fund management marketing firm represents only one manager – Holowesko Partners. To emphasise the commitment, Andrew Nolan named his new firm after the beautiful little island in the Bahamas (‘Eleuthera’). Holowesko’s Australian super fund clients, as publicly disclosed, include Statewide in South Australia and REST, based in Sydney.

Holowesko Partners is more than just a gutsy value manager, providing both traditional and high-octane strategies, as per the new Australian-domiciled funds. It has a strong commitment to ESG principles. Mark Holowesko, a keen sailor who actually holds a world championship medal, points out that about 70 per cent of the Bahamian islands are less than one metre above the ocean’s high-water mark. “I come from a family which has a strong environmentally conscious background,” he says. “My mother was the president of the Bahamas National Trust, which was the country’s wildlife preservation group. She was also the Bahamas Ambassador to the United Nations for environmental issues.”

He says that Sir John Templeton, his mentor, was quite religious, too, and never wanted to invest in tobacco and other such stocks. “We produce an ESG report on every company we invest in,” Holowesko says. “We think about it a lot and we score them. We live it. It’s an extremely important part of what we do.”

– G.B.

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