ECP Asset Management Chairman & CIO Dr Manny Pohl AM: Redefining active investing
At the beginning of his funds management career, Emmanuel “Manny” Pohl never dreamed that three decades later his contributions to the industry would receive recognition from Queen Elizabeth. Despite amassing an impressive list of accomplishments over the years, including building two multibillion-dollar businesses from the ground up, Pohl says that receiving the Order of Australia in June is at the top of his professional highlights reel.
The founder of one of Australia’s top-tier investment firms, ECP Asset Management (ECP), Pohl was among the elite recipients of this year’s Queen’s Honours List for Australia for his significant service to the finance sector and general community. While the process was nerve-racking, he describes the recognition as “an amazing accolade. It was a really wonderful moment for me and certainly not expected.”
Since immigrating to his adopted home of Australia in 1994, the native South African has made an undeniable mark on the industry. Employing a three-point strategy that Redefines Active Investing, ECP has skyrocketed over the past year into the country’s preeminent asset management firm. With $1.3 billion in funds currently under management, the company is guiding retail investors through a unique style that delivers long-term results outpacing the general market.
The Road to Excellence
Pohl began honing his skills as a financial investment whiz more than 30 years ago with a leading South African brokering firm followed by a large Australian investment house. During his time as a member of the South African Accounting Practices Board, he was appointed as a delegate to the annual meeting of the Board of Governors of the World Bank and the International Monetary Fund in Bangkok.
Along his impressive journey, Dr. Pohl has accumulated a string of credential letters behind his name, including DBA, BSc (Eng), MBA, FAICD, MSAFAA and F Fin. His engineering background gives him a methodical and disciplined approach to his role as a director, which he views primarily as a mentor position rather than a dictatorship. He has attained status as a Master Practitioner Member of the Stockbrokers and Financial Advisers Association and is a distinguished fellow of the Global Federation of Competitiveness Councils, Australian Institute of Company Directors and the Financial Services Institute of Australasia.
In 1994, he brought his expertise to Australia by joining forces with Wilson HTM. Two years later, he co-founded Hyperion Asset Management, which he guided into an award-winning fund management firm overseeing more than $5 billion in assets. Five years ago, he sold his stake to form EC Pohl & Co and, with his son, Jared they started the investment house ECP Asset Management. “It’s been a wonderful run. Australia has been really good to me,” says Pohl, who is energised about the future potential of his latest venture. “ECP is certainly firing on all cylinders.”
Redefining Active Investing
With corporate headquarters based in Bundall, Queensland, ECP has already raised $2.5 billion in committed funds. ECP operates as a holding company for four different entities: ECP Asset Management; Flagship Investments (ASX:FSI) for general Australian equities; Barrack St. Investments (ASX:BST) for non-traditional smaller mid-cap stocks; and Global Masters Fund Limited (ASX:GFL), which grants access to Warren Buffet’s high-status Berkshire Hathaway portfolio.
This time around, they consciously approached the investment strategy differently. “We coined the term ‘Redefining Active Investing’ because active investors have started to lose their way a bit, particularly if they come from a stock picking background like I do,” explains Pohl, who is dismayed that so many firms are scaling back forensic research. Rather than following the trend of rating stocks based on future performance, ECP looks at the results the management team has achieved and the tenure of the business. If they like the business model, then they start to look at the potential.
“We consider the performance over the past three to five years and then asses its potential. Then we have small, concentrated portfolios. We don’t bet on everything, but we certainly bet on the ones we like and ensure the alignment of interests within our team,” Pohl says. “We insist that all our guys put their money into the same stocks that we include in our clients’ portfolios so that there is total alignment of interests. That’s what I think creates a really successful fund management business.”
Tapping the Vision of Younger Teams
ECP is also bucking the tradition of having senior employees looking after client portfolios. In fact, tapping the vision of younger teams has become a breakout strategy in achieving outstanding results. Pohl cites their agile minds and ambition as well as their understanding of modern technology and what is going on in the world as tremendous assets. He also applauds their generational viewpoints on corporate governance and respecting the attitudes towards social and environmental issues.
“We pick a group of young men, get their buy-in into the process and what it delivers. It’s a very different approach, but the results speak for themselves,” he says, noting ECP’s top ranking among 64 asset management firms over the past year, according to research house data. Over the past five years, the company ranks sixth overall. His investment management strategy, which he has been perfecting since 1998, has delivered a long-term return of 12.5 percent in comparison to the general market’s 8 percent.
“This is an amazing feat thanks to the team around me. I’m really happy with the progress we’ve made. We’ve got a young team that is going to be around for 20 to 30 years working together. Over that period, they are going to be one of the pre-eminent firms in Australia,” he predicts.
By putting young teams within this framework and allowing them to follow the process, the company is also able to minimise the inherent key-man risks that plague asset consultants and research houses. Pohl has found that many of the typical workaround strategies, such as hiring people of different age groups and demographics, are not as effective. Developing a system and processes that everybody consistently follows is important, but you must hire the right people to follow your philosophy, he says. “That’s not to dictate the things you are going to invest in but rather teach an investment philosophy and allow the team to apply it to their knowledge of companies. If companies don’t live up to their testing, then they fall by the wayside.”
Investing in More Than Financial Returns
As a firm believer in taking personal responsibility for building strong communities, Pohl shares his expertise as a board member for various causes, major corporations and professional organisations. His passion for sports, arts and the environment drive his continual involvement with Bond University’s Rugby Club, Athelney Trust PLC, Flagship Investments Limited, Global Masters Limited and the Currumbin Wildlife Hospital Foundation.
This same commitment to community is a differentiating factor in ECP’s success, says Pohl, especially because it resonates so strongly with the younger workers, who are more global in their thinking. Each senior team member is expected to contribute their time to a non-profit organisation. “If it takes them away from the office for a couple of hours, that’s accepted. We insist that everybody is involved in the community in some way.”
Company-wide participation is also strong for a cooking event for the homeless, and 8 percent of annual profits are directed into the Pohl Foundation. “The younger people believe in this kind of approach, maybe a little more so than what the older generation does,” Pohl explains. “They are all keenly contributing in their own time, and the firm contributes with money as well.”
Looking forward to the future, Pohl wants his companies to “perform well and generate wealth for our clients. Clearly, we want to be recognised as one of the pre-eminent firms in Australia. That goes not only for investment performance but also the ethics of the business and how we conduct ourselves. Reputation comes from both of those things.”
In Pohl’s world, working with integrity is the most important factor. “I’ve always said that fund managers have nothing to offer people other than their reputation. We want to be seen as a firm that puts something back into the community. When we invest your money, you know that it’s going to be invested in a way that I’ve always referred to as ‘it’s better to sleep well than to eat well.’ We are very particular about businesses and investments and what we do in the community to make sure it really rings the right bells.”