Just because Magellan Financial Group's Hamish Douglass is picking stocks for charity, don't expect him not to make a truckload of money for Rich Listers like Mike Cannon-Brookes, Solomon Lew and the Stokes, Ainsworth, Lowy and Packer families.
Douglass will spearhead five of the country's best fund managers picking their top 15 stocks for a new $500 million listed investment company to list on the stock exchange on November 21. Another 10 stocks will be picked from fund managers presenting at the annual Sohn Hearts and Minds Investment Conference on November 16, including Geoff Wilson and Alex Waislitz.
The fund managers, directors and brokers involved have all waived their fees so that the listed investment vehicle can donate 1.5 per cent of net tangible assets, regardless of performance, every six months to support life-saving medical research, but are also determined to shoot the lights out for investors.
The listed investment vehicle known as HM1 was first revealed by Street Talk and is expected to open to the public on October 15 at $2.50 per share, after being backed by Rich Listers, who have already committed $175 million
"Fundamentally they are there because they think it's a great investment idea and they will make money from it with the comfort it is for a good cause, but they are not looking at this as a charitable donation," UBS chairman of investment banking in Australia Guy Fowler, who has been meeting with wealthy families over the past week, tells The Australian Financial Review.
Country's cream stock-pickers
The public will be able to invest alongside star stockpickers from Magellan, Caledonia, Cooper Investors, Paradice and Regal who will each pick their top three stocks along with the best 10 stock picks from the conference.
"People would normally be incredibly protective in the funds management industry and don't support other people but this shows the very best of this industry coming together," Mr Douglass, who is also investing his own money, tells The Australian Financial Review.
"Each of the fund managers will be picking their cream and putting them into a portfolio of 25 stocks which is completely unique, it is everyone's very best ideas in one concentrated portfolio.
"Our largest investment at the moment on the public record is Alphabet [the company formerly known as Google], if it is still our largest highest conviction portfolio position you would expect we would probably put that investment forward but there is some time to go between now and when the fund gets launched."
Serious returns
CEO of UBS Australia Matthew Grounds, who is expected to join Mr Fowler as a director of HM1, said it is both "a good investment" and raises money - expected to start at $7.5 million - for "some great causes" which include the Victor Chang Cardiac Research Institute, Black Dog Institute and the Charlie Teo Foundation. Mr Grounds and Mr Douglass sit on the Victor Chang board together.
"The beauty is some of these funds are not available to the public so this is really unique," Mr Grounds says. "The five core fund managers all have slightly different strategies but are putting up their best three ideas. There are no performance fees, just a base fee of 1.5 per cent and all of that money goes to medical research."
The stock recommendations from last year's conference were used by UBS used to set up a structured product seeded by a $10 million grant from Paul Ramsay's foundation and created the genesis of the idea for the LIC.
Recommendations last year included Caledonia Investments' Mike Messara's choice of US-based restaurant disrupter GrubHub, which has returned 126 per cent, and Regal Funds Management Philip King's choice of speech and technology services group Appen, which returned 148 per cent, compared to a 6 per cent return from the All Ords Index.
The investment vehicle also builds on the idea of fund manager Geoff Wilson, who will be joining the board of HM1 after he launched the Future Generation Investment Company which mandates Bennelong and Paradice to invest money on their behalf, with their fees also donated to charity.
Former Colonial First State CEO and now philanthropist Chris Cuffe is set to take the reins of HM1 as chairman while director of BT Financial Lorraine Berends, MH Carnegie and Sunsuper director Michael Traill and managing partner of Zenith Investment Partners David Wright expected to join Mr Grounds, Mr Fowler and Mr Wilson as directors.
