|
I spent the first twelve years of my working life with the family
business based in the Black Country of the West Midlands. The area
had seen better days. Local restaurants had limited menu options and
a common theme (drive-through’s!) but at least this kept the local
health inspectors and pest controllers in work. But the business –
producing shop fittings – made it all worthwhile. It was a
specialised and a highly competitive market, but we were recognised
as the best, which was just reward in many respects.
At the turn of the millennium, as with many businesses,
manufacturing was changing and a different direction had to be
sought. I had reached the milestone of turning thirty and realised
that birthdays become much more significant when the first number
changes! I decided I needed a new challenge. My aim was simple, to
repeat the excitement and success of the old business but in a new
industry. Twelve months of lengthy negotiations and some
eye-watering consultants’ fees later, the deal was completed.
One chapter had finished and another about to begin. But in between
the two I spent time evaluating plenty of new ideas. The priority
was to enjoy my new vocation whilst being involved in a business
which really did put the customer first – something many companies
had forgotten while being swept along during the boom period of the
nineties.
My high street bank had shown little interest in me when I was
involved in a manufacturing business, but a glimpse of the sale
proceeds brought forth quite a different attitude. Now I had them
falling over themselves to help. My friendly, local private banking
account manager may not have been based in Mumbai, but to learn more
I had to approach an investment adviser in the City of London. Off
to London I went.
The bank’s investment adviser made a valid point about the
efficiency of having my investments centralised. But my questions
about what lay behind the selection of in-house funds to which I
would be consigning my capital rang alarm bells. It was pretty clear
that this was a process designed to manage money with minimal
inconvenience – for the bank that is – whilst keeping me blissfully
uninformed and charging me extravagantly for the privilege.
Fortunately I had arranged other meetings to justify the special
journey to London. Next I met a hedge fund manager in Canary Wharf.
Like alchemists of old my host could make me money from nothing.
Like a manufacturer of today I knew that you couldn’t. The only
phrase I could remember as I left the building was “arbitrage of
cross-collateralisation”. I had no idea what it meant and I wasn’t
sure that the hedge fund manager did either. Experience suggests
this rarely results in a happy business relationship.
So it was back to the City to an old-fashioned stockbroker for what
proved to be an old-fashioned lunch. Unfortunately his investment
ideas were about as up-to-date as the port which rounded off the
meal. “Dear boy, we never touch manufacturing companies because they
never make any money.” This chap clearly had not done his sales
homework. “We’re buying dotcom stocks now.” Had he said he was an
old Etonian or an old Estonian? I decided it was the latter for all
the sense he’d talked.
Finally I met an investment advisor specialising in offshore funds
for high net worth individuals. It is the part about fees I remember
most. I was going to be charged a massive entry fee, an even bigger
annual management charge and yet more still should I ever want to
get my hands back on my own capital. The conversation was very short
on just how I was going to make any returns to pay the fees.
Having had a thoroughly frustrating day I met up with an old school
friend, Bill Roden, to chat the day through over a beer or three.
Over the years, what was now left of Bill’s hair had turned grey,
but he had gained an impressive list of professional qualifications
and industry awards and was now managing “a billion or so” for a top
fund management company. I asked Bill for the secret to the
investment performance that he had achieved. He explained how he
focused on businesses that generated cash and how that can differ
from published profits. He only considered companies which could lay
claim to a dominant industry position or a specialist niche. Finally
he said he waited to pay the right price for these companies and not
what market thought they might be worth. Simple, but it made perfect
sense to a former manufacturer.
On my way home from London the next day I made my mind up. I knew I
wasn’t the only person in the UK having trouble finding an
investment service worthy of the name. People say if you want a job
done properly do it yourself. So I have. I’ve dragged Bill away from
the City and together we have set up Montague Capital to manage
customised investment portfolios for individuals. It’s really not
that different from a manufacturing business after all. Work with
your customers to understand what they want, deliver that service
and they will be happy to pay a sensible charge.
Oh, and remember, when a potential client asks for an appointment,
offer to travel to see them at a location convenient to them. After
all, they are the most important people in any organisation.
www.montaguecapital.com
Julian McGinnity, Managing Director
Montague Capital, Number Seven, Elm Court, Arden Street,
Stratford-upon-Avon CV37 6PA
tel: +44 (0)1789 415588
fax: +44 (0)1789 294195
e-mail: jmcginnity@montaguecapital.com
Authorised and regulated by the FSA
---------------------------------------------------------------------------
|
