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John Tidd (Hamco): "Many investors forget that technology is a cyclical industry"


The ‘value investing’ philosophy will make a comeback, it’s just a matter of patience. Think so John Tidd Kimball, founder of the Spanish Hamco Financial and also Chairman and Founder of Horizon Capital Management, an advisor to the Horizon Growth Fund since 1999. This renowned investment manager, who has reaped an annualized return of 17% since he started managing alternative funds, knows what he's talking about. He was a student at the Columbia Business School of Jim Rogers, co-founder with George Soros of the Quantum Fund, and has worked for leading entities such as First Boston, JPMorgan or Citi. Almost a year ago, he partnered with Esfera Capital Gestión, where he advises the Hamco Global Value Fund, an international equity fund, through Hamco Financial. The fund, which this year falls more than 17.5%, has already exceeded 10 million euros despite its first crisis, that of Covid-19. In an interview for Bolsamanía, Tidd assesses the behavior of this product during the coronavirus and its chances of a long-term comeback.

Question: You are on your way to your first year at the helm of the Hamco Global Value Fund, an exercise in which all managers have suffered from the pandemic to a greater or lesser extent. How has your handling of the crisis been and how do you plan to get out of it?

Reply: Without a doubt, it has been an interesting year that will remain in the memory of all of us. In relative terms, profitability has been slightly better than that of other ‘value’ managers, mainly due to global diversification and company selection, which was offset this past month by a more cautious market position. As advisers to the fund and as faithful followers of the ‘value investing’ philosophy, our goal is always to invest for the long term. Therefore, although any decline is painful, we are comfortable with the companies that the fund has today.

The ‘value investing’ has been strongly criticized for its poor results, especially against ‘growth’, a differential that is at record highs. Do you think that the ‘value’ has died, that it will return as usual or that it is transforming into a new version of itself?

The ‘value investing’ has been put aside by the investment community. On the contrary, 'growth' and 'momentum' have been very favored in recent times. What should not be forgotten is that this situation is not the first time it has happened. In 1998-2000, we saw something very similar. Then it was said in the news that Warren Buffett had lost “his touch” or that he was no longer the investment guru that everyone thought, that 'value' investing no longer worked. Tech companies were trending and highly sought after. It is the same type of language that is used today. In our opinion, we believe that in three to five years the true results will be seen for those who buy 'growth' and 'momentum' companies at basically any price. We also think that many investors tend to forget that tech companies are an industry that is cyclical.

What are your main portfolio positions today and why?

The fund's largest positions are in Indonesia. One of these companies is United Tractors, which is an exclusive distributor of Komatsu heavy vehicles along with other brands and also has mining activities, including gold. It is an excellent company that we have known very well for more than 20 years. Another one that we highlight is Pp Persero, a construction and property company. We really like Indonesia for the long term because of its good growth and demographics. In France, we have Renault for its excellent price and ‘performance’ of the last ten years. In Greece, we have Fourlis, which has the Ikea franchise in that country and also in several Balkan countries, as well as the Intersport brand. In Canada, there is Peyto, which focuses on the production of natural gas and is a potential great beneficiary of the decline of the American ‘shale oil’. In the past year, gas prices in Canada have doubled and Peyto's stock fell. It is estimated that, in the next two years, it will be seen in the results.

In three to five years the true results will be seen for those who buy 'growth' and 'momentum' companies at any price

Many 'value' managers are moving their portfolios to Asia. Is it the lifeline for this investment style?

In our case, we find many interesting opportunities in Asia. There are very good companies, in a favorable economic environment, with good demographics, handling Covid-19 very well and, what is more important for a 'value' investor, trading at good prices.

Others suggest that the true ‘value’ should be played in Latin America. Are you of that opinion?

It has been difficult for us to find good investments at a good price in Latin America and in liquid companies, but we continue to search.

You associated the fund with Sphere, but now you find that it will soon be in Andbank. Will you continue with Andbank or do you intend to change the manager once the integration is completed?

In principle, we are still waiting for Andbank to acquire the Esfera Capital Gestión business. We consider it to be a very good brand, so it gives us the peace of mind of being backed by a solid company and excellent professionals.

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