– Joshua Peach for AFR
Link to the AFR original article: MFF ASX: Magellan’s Chris Mackay ropes Montaka into MFF Capital Investments (afr.com)
Magellan Financial Group co-founder Chris Mackay is reshaping his own Magellan offshoot by snapping up global equities manager Montaka into his $2 billion investment vehicle.
MFF Capital Investments, a listed investment company known as the Magellan Flagship Fund until a rebranding and operational restructure in 2016, is set to purchase the New York and Sydney-headquartered funds manager for an undisclosed but “nominal” fee.
Mr. Mackay – who stepped back from directly managing money for Magellan in 2022, soon after the shock departure of fellow co-founder Hamish Douglass – has worked closely with Montaka’s Andrew Macken and Chris Demasi for several years and is among the fund manager’s largest backers.
Speaking to MFF investors on a call on Wednesday, Mr Mackay outlined an ambitious vision for Montaka, which manages about $260 million.
“If they become excellent and sustain excellence, they would become a wonderful partner for advisers and investors, attract well-deserved attention and MFF will benefit,” he said.
“A successful Montaka will attract wonderful talent for decades and [become] the employer for careers of choice.”
Mr Demasi was similarly glowing in his enthusiasm for the fund’s move into MFF.
“We can think of no better partner for Montaka than MFF, in our view Australia’s premier investment firm,” he said. “Through Chris, Montaka has had a long-standing association with MFF, and the acquisition is a natural evolution of that relationship.”
Montaka’s ‘small winners’
Both funds employ a high-growth, high-conviction investing style, which has stood them in good stead in recent years as large bets centring on mega-cap US tech companies powered strong returns.
Montaka’s global long-only fund has charted a near 40 per cent return in the past 12 months, buoyed by holdings in Amazon, Microsoft and Facebook owner Meta, as well as Visa and Mastercard – all of which are also held in Mr. Mackay’s fund, based on recent disclosures.
Those bets have helped fuel a banner year for MFF, which raked in $447.4 million in net profit in FY24, up from $323.6 million in the previous financial year. Shares in MFF are up about 30 per cent in the past 12 months, bringing the firm’s market cap above $2 billion.
Mr. Macken and Mr. Demasi, as well as Montaka director of research Amit Nath, will continue in their respective roles and the fund will operate independently of MFF.
As rationale for the purchase, Mr. Mackay stressed the improved “research focus and capabilities” Montaka would bring to the firm in the form of stock picks.
“We want to find smaller winners,” he said. “Montaka Global clearly have done that.”
Mr. Mackay noted that several of Montaka’s bets would have benefited the MFF fund, including cloud-based software company Salesforce and alternative investment manager Blackstone.
“Those portfolio holdings … clearly would have benefited MFF if we had acted,” he said.
He noted global music streaming giant Spotify as another Montaka holding the fund missed out on.
“I was insufficiently in touch to fully understand the capacity for that to be the leading, dominant business, given the other alternatives,” he said. “If we could get 15 or more of those within the first three or four weeks of Montaka joining us, that’d be fantastic.”
MFF chairwoman Annabelle Chaplain said Montaka’s increased research capabilities would help abate concerns that the fund relied too heavily on Mr Mackay’s input, presenting a risk should he depart.
“We’ve been asked in previous years about a key-man risk, and while we’re hoping [Mackay] will live to 120 and he’ll stay with MFF, it does give the board an additional level of comfort that we have not just the research but the portfolio manager capability,” she said.
Source: Link to the AFR article by Joshua Peach
