Success and More Interesting Stuff Livewire Markets

A revolution has taken place in share investing since the turn of the century. American firms have led the charge with the likes of Vanguard and Blackrock taking passive investing around the globe. 
Disenchantment with active fund managers has seen funds flow into the passive sector, accelerated by the emergence of exchange traded funds, or simply ETF’s.
In Australia, the revolution arrived late. Active managers held sway for many years before eventually the dam wall broke. The American behemoths came hard, but they didn’t have it their own way. 
Aussie startup Betashares grew out of the GFC and took up the fight. Cobbled together by Alex Vynokur, an immigrant from the former Soviet Union, it wasn’t long before Betashares captured the attention of market participants around the country.
15 years on and Betashares has more than 90 ETF’s, $37 billion assets under management and 150 employees. It is the second largest ETF provider in the Aussie market and in 2023 managed to rank number one for inflows with 37 per cent market share.
As a 16-year-old Vynokur and his family left the Ukraine as the walls of the former Soviet Union came crumbling down. Alex had no English and had to start from scratch. He caught on quickly and in a few short years was studying Law at UNSW. 
A brief stint working as a lawyer was followed by a job at finance house Pengana with Malcolm Turnbull and Russell Pillemer. He deduced that not all active managers were able to beat the market. Around the same time, he latched onto the emergence of ETFs. Mortgaging his house and taking time for a fact-finding tour of the US saw him kick off Betashares.
In this episode of Success and More Interesting Stuff, Alex discusses his view on the future of both passive and active investment styles, the incredible growth of Betashares and his passion for making an impact on war-stricken Ukraine.

Affordable housing seems to be an elusive goal in Australia. However, Lifestyle Communities (ASX: LIC), which is celebrating its 21st birthday in 2024, might have just cracked the code. 
 
The company’s land rent model is spreading across Victoria at an ever-increasing rate. To date, more than 30 villages within driving distance of Melbourne have been built or are in the planning stage. In total, more than 5,700 homeowners have been accommodated with many more to come.
Lifestyle Communities started life modestly. At the helm was property veteran James Kelly ably assisted by his partners Bruce Carter and Dael Perlov. The company debuted on the ASX four years later, quietly backdooring into a listed cash box. Over the next 17 years, only the insiders and some unsuspecting investors have enjoyed the stunning 2,500% return. Today the company has a market value of $1.7 billion.
Like most successful businesses the original idea was a simple one. Make housing affordable for empty nesters in their late 50s and early 60s. Sell your home and move into a brand-new village nearby. Buy the home and rent the land, having enough capital left over to live a comfortable life.
"In Australia, every night, we have 12 million empty bedrooms, which speaks volumes to this empty nester challenge that Australia faces," Kelly says.
"We should have a 'last home buyers' grant. We know that first-home buyers' grants typically go into the builder's pocket when the government hands those out when there's a downturn in housing. But a 'last home' buyers grant would actually encourage people to get out of their homes, downsize and free up housing stock for the next generation." 
Today, Kelly, at 64 years old, is a prime candidate to be a Lifestyle Communities customer. I get the feeling though that he is still happy to keep the accelerator to the floor. 
I first met James not long after the company listed on the ASX in 2006. He has always been an engaging, upbeat individual, defying the typecast property developer image. In this podcast, he takes investors through the journey, and shares what keeps him inspired after 21 years in the business. 
Note: This episode was recorded on Wednesday 28 February 2024. 
 
Timecodes: 
0:00 - Intro 
2:33 - From an idea in a cafe to a $1.8 billion company - coming up with the Lifestyle Communities concept 
5:36 - The transformation of the retirement industry 
7:17 - Early financing struggles and selling the concept 
11:28 - The intrinsic desire to be part of a community 
13:03 - James Kelly's upbringing, family life and first foray into property 
16:03 - The lasting impact and legacy of property investment and development 
17:14 - The key to successful property development 
19:04 - Experiences that created the leader James Kelly is today 
25:52 - The importance of pricing risk as a busy owner 
29:22 - The Lifestyle Communities model and its first development 
34:09 - Backdoor listing on the ASX
37:18 - Lifestyle's most recent capital raise and plans for the future
40:38 - The transformation of Lifestyle's share register 
41:56 - The opportunity in Generation X  
45:56 - Why leaders/managers should focus on being kind
47:46 - How to solve Australia's housing crisis  
50:32 - Why James Kelly won't be retiring any time soon 
 
 

Over the last four years, Success and More Interesting Stuff has been privileged to host some of the legends of the Australian equity market. Arguably though no one has had more of an impact on the industry than Kerr Neilson.
 
Originally from South Africa, Neilson landed on Australian shores in 1983 where he joined the ranks of Bankers Trust. BT was on the rise and Neilson stood out among the pack. After just two years, he was placed in charge of the retail business. Under his leadership, it became the growth engine of the firm managing money around the globe.
 
BT’s mercurial handling of the 1987 crash saw Neilson’s retail arm of the company hit its stride, garnering billions of dollars to manage. Stellar performance and a growing reputation as a canny operator saw Neilson build a name for himself. 
 
In 1993, Neilson decided to go it alone forming Platinum Asset Management. As one BT operative described on the day of his departure, “the trading room floor at BT felt like it was hosting a funeral.”
 
Counting George Soros’ Quantum Fund among its original investors, Platinum got off to a flying start. Pitching itself as a global investor, the company powered through the next decade reaching $26 billion of funds under management. In 2007, Neilson and his team decided to float Platinum. It was good timing, with the market nearing a peak before the Global Financial Crisis.
 
Neilson ran Platinum for another decade before handing the reins to Andrew Clifford. In 2022, he decided to depart the Platinum board, ready for the next part of his journey.
 
In this episode of Success and More Interesting Stuff, Neilson shares some of the major moments that shaped his career trajectory, some of his biggest wins during this time, as well as why his inventive ancestors taught him the "importance of being in the game - whatever the new game is" - and right now, he believes that is AI. 
 
He also addresses some of the major changes that he hopes are on the horizon for Platinum investors - and shares why he still believes he has a responsibility to shareholders even after all this time. 
 
Note: This interview was recorded on Thursday 8 February 2024. 

In 1987, Olev Rahn was pounding the streets of New York's financial district, meeting with Wall Street's best strategists. Rahn, who was running BT Financial's institutional business Pendal, felt distinctly uneasy about the exuberance gripping financial markets. It felt like a giant bubble, and the deeper he dug, the more convinced he became that a reckoning was just around the corner.
Rahn's instincts proved spot on as markets cratered on what has since become known as Black Monday. Combining put options and futures selling saw BT breeze through the '87 crash while others crumbled. From that moment, BT was the main game in town. Billions flowed into the coffers, and it was the number one place to work in Australia. Rhan remained key until BT Australia was sold to the principal group for 2.1 billion in 1999.
In this episode of Success and More Interesting Stuff, Rahn discusses the growth of BT Financial in Australia, the key figures that were instrumental in building the firm, and how the firm navigated the 1987 crash. Rahn also shares his views on markets in 2024 and why he is happy to have some cash at hand.
 
Time stamps
0:00 - Introduction
3:10 - Early life and leaving Estonia
8:15 - Developing an interest in economics
9:49 - An opportunity with Ord Minett and the XYZ method of research
15:13 - A move to London on the back of booming markets
20:03 - A call with Chris Corrigan and bringing active management to Australia
25:05 - Good performance leads to rapid growth Keating
30:41 - Kerr Neilson and Jillian Broadbent join BT as it becomes a powerhouse
34:15 - 1987 and the era of corporate excess
38:54 - The strategies Olev Rahn used to protect BT from the crash of 1987
42:00 - The signs of exuberance prior to the 1987 crash
47:39 - A golden era for Bankers Trust
50:00 - Olev Rahn’s views on markets in 2024

Every year,  fund manager Eley Griffiths invites stockbrokers from across the country to a lavish dinner. In the cutthroat world of the share market, stockbrokers rarely get treated by their clients. Eley Griffiths, the $1.2 billion small company manager known affectionately as EGG, is a rare breed.
The fact that EGG is currently celebrating its 20th year is a testament to the value that everyone contributes to the process of grinding out returns in the volatile small company market. It is a deliberate strategy and reflects the founder's personality. 
Ben Griffiths is a 30-year-plus veteran of the market. The son of a comedian, Griffiths has always loved an audience, and appreciated their participation in the show, whether it be the speech at the annual dinner, or the day-to-day process of picking stocks.
 
Leaving school, Griffiths found himself on the trading floor of the ASX. He's old enough to remember the 87 stock market crash. From this came many lessons, including a desire to switch to funds management. He found a home as a dealer at Mercantile Mutual and was planted in the middle of a treasure trove in the form of Greg Matthews, David Paradice, Peter Mellett, and John Morgan. He progressed from dealer to analyst, and then portfolio manager. At the turn of the century, he had a brief stint at BT where he worked with Brian Eley, and before long the two had hatched a plan to form EGG and do it their way.
Looking back over 20 years, there were some difficult times. The first 12 months were a real grind, and then years later, Eley became seriously ill before passing away in 2018. Through all this EGG has moved forward with Griffiths at the helm. In the 20th year, the group is branching out into the mid-cap fund. No doubt there are plenty more returns, and broker dinners to be had.
Time stamps
5:00 The highs and lows of 20 years in small caps
9:50 The powerful role of Ben Griffiths’ grandmother
13:15 Working on the trading floor in the 1980s
20:15 His move into institutional broking
26:40 “A richer training ground you could not have hoped for”
32:00 A “blank sheet” opportunity at BT
42:30 Reflections on Lehman Brothers’ collapse
48:00 The loss of Brian Eley
52:00 His market outlook for 2024.

Graham "Skroo" Turner grew up in splendid isolation. His family owned an orchard in Southeast Queensland, and he rode a pushbike to school, which was so small it only required one teacher. Even when he went to university, he avoided humans and decided to study vet science.
Skroo, now seventy-four years old, still sits atop of Flight Centre (ASX:FLT), Australia's largest travel agency, which operates in twenty-four countries. He is the fearless leader of thousands of employees and has a unique management technique that has allowed the company to scale well beyond its humble beginnings.
While Flight Centre was officially born in the early 1980s in Australia, its predecessor, Top Deck, kicked off in 1973, dreamt up over a beer with some friends at Oktoberfest in Munich, Germany. The Top Deck story is legendary in Australian corporate history, with Skroo and his clan driving buses out of London to all parts of the globe, including Afghanistan and Morocco.
He was back in London a few weeks ago to celebrate the 50th birthday of Top Deck and enjoy a beer with some of the old crew who shared his sense of adventure.
Skroo has come a long way in the 50 years and has run into a few potholes and even roadblocks. There was 9-11, The GFC, and of course the COVID-19 virus that induced a near-death experience for Flight Centre. Somehow he has battled through and still seems to enjoy it. In fact, not much has changed. He still looks and sounds like an orchard farmer from Queensland, retaining his laid-back manner that disguises an entrepreneur with a mean competitive streak.
In this episode of Success and More Interesting Stuff, Turner talks about growing up on a farm, how he began his career in tourism, his unique approach to management as well as the highs and lows of Flight Centre’s journey.
Time stamps 
0:00 - Introduction
1:50 - 50-years since the launch of Top Deck
4:56 - Growing up in isolation and breeding a sense of adventure
8:59 - Travelling through Europe sows the seeds of a travel business
16:10 - The first Flight Centre stores and rapid growth
24:20 - Flight Centre lists on the ASX
26:08 - The ‘Families, Villages and Tribes’ approach to management
30:43 - Don’t sweat the small stuff and the alchemy of growth
34:56 - The enormous cost of COVID-19 for Flight Centre
40:26 - The future for airline travel in Australia
46:08 - Making Flight Centre relevant for young people
47:42 - Succession