About Me

My investing journey began in 2008, pretty much at the trough of the GFC. Not understanding global finance, I couldn’t understand how subprime loans in the USA would affect Australian business. The first stock I ever bought was Macquarie Airports, which I followed with investments in Commbank, Wesfarmers, Stockland, Rio Tinto, and BHP. Through ignorance I made a directionally correct bet for roughly the right reasons and did very well in subsequent years. Emboldened by my genius, I went into small caps and mining services in 2011-2012, lost a lot of money and gave back most of those gains.

The first properly good call I made as an investor was the end of the iron ore boom in 2014. In 2013-ish I'd started buying iron ore stocks like Rio and some juniors like BC Iron. Global iron ore demand was growing ~4% per annum, prices rose to >US$100 due to a mismatch in supply and demand, the AUD was US$0.80 and falling, and miners were printing obscene amounts of cash. I made ~100% of my purchase price in one year in dividends from BC Iron.

The industry ramped up production to take advantage of high prices. BHP, RIO, Vale flagged ~30% increases in output within a year, and juniors were aiming to double production. I sold. The rest is history. Iron ore went to $40, the industry went through a massive cost structure reset, Fortescue bonds were trading at 50 cents and most of those junior miners don't exist anymore. (Writing this in 2021, it is satisfying to observe much stronger capital discipline in the industry today).

My horizons broadened and I grew interested in technology businesses, food, and healthcare. I read industry and labour regulations, Basel III, and the usual investing books. By 2016 I was growing bored and disillusioned. Over the next two years I watched a significant amount of very strong talent leave Motley Fool for other opportunities. I thought, and still think, that it was nigh-criminal from an organisational perspective to let these people get away. Australian readers will recognise most of their names: Owen Raszkiewicz (Rask Finance), Matt Joass (Maven Funds), Claude Walker (A Rich Life), Andrew Page (Strawman).

That was the first time I recognized that it is very difficult for organisations to facilitate proper careers for their most capable staff, and it's an observation I've taken with me everywhere since.

In early 2017, Owen Raszkiewicz shot me a message on Skype. “Hey do you remember Henry Morgan?”

Dunno. Is that the pirate LIC thing?

“Its’ NTA is up 100%. AFTER paying a 20-cent dividend"

+100% years are extraordinarily difficult to achieve, especially after paying out ~20% of your starting capital, and I was curious. Upon cursory review of the balance sheet, it was obvious that the overwhelming majority of the performance had been driven by upwards revaluation of Level 3 assets (where valuations are driven by key assumptions rather than reference to market price for similar or identical assets). The apparent contradictions intrigued me. To give a few examples of things that I saw:

• A company publicly engaging in behaviour where its prospectus specifically says "we are not able to engage in this behaviour"
• A fund talking about its views on macro markets, Mexican Peso etc, when all of its assets were in unlisted businesses, and the overwhelming majority of reported performance was driven by mark-to-model on a portfolio of Level 3 unlisted assets
• When both sides of a transaction are reported differently (e.g. Company A reports selling 100 shares to company B at $1, Company B reports buying 87 shares from Company A at $1.30)

10footinvestor wrote a series of reports on the Pirate companies that highlighted the potential for incomplete disclosures, inflated asset valuations and various other fun miscellanea. You can read this corrective disclosure to the ASX to get an idea. This took several thousand hours and I am quite proud of this image which is a simplified map of the relationship between the companies: I was forthright in my description of these issues and have been told that I hold the unofficial record for the number of "f- words" quoted in the AFR.

You can read some of the media coverage here:

• Stuart Mcauliffe to expose anonymous investor blogger
• Pirate Investor Stuart McAuliffe faces mutiny
• Hedge fund's pirate-themed door has hidden door but no plank
• ASIC's gripes with skyrocketing pirate fund unearthed
• Shadow director probe in pirate fund business

In 2018, a group of Benjamin Hornigold (ASX:BHD) shareholders led by Gary Miller, Sulieman Ravell, and Michael Glennon (assisted by law firm Corrs Chambers Westgarth and myself) applied to the Takeovers Panel to reverse a related party takeover bid. My research formed the foundation of the application, and The Panel found that the bidder had improperly used a lock-up device to reduce the attractiveness of BHD to alternate buyers and ordered the reversal of the lock-up device.

Messrs Ravell, Miller, and Glennon subsequently rallied enough shareholders to vote out and replace the Pirate directors. Thanks to our efforts, BHD was able to recover ~$7m for its shareholders, exit suspension, and return to trade. Shareholders were able to realise approximately a third of their assets (all that was left). You can read more about that here:

• Takeovers Panel - Reasons For Decision ATP 18 [2019]
• The pyrrhic victory of the pirate mutineers

No.  To view them as "bad" is to misunderstand the purpose.  The purpose is to provide structured, timely information in an easily accessible format to investors. If you want to know the ownership structure of XYZ company without calculating it yourself - there's a Simply Wall St article for that.  If you want to know what analysts are forecasting for next year & if the forecasts have changed - there's a Simply Wall St article for that.

Yes, they are "robo", but you know what you are dealing with and you get the information fast, in an attractive format, with no hidden agenda, literally for free.  Simply Wall St doesn't recommend or promote stocks, and the only way revenue is generated is via individual subscriptions to the analysis platform (this may have changed since I left). Simply Wall St is one of the largest financial publishers in the world, and the information is free. Not bad for robo, eh?

Writing algorithmic articles was extremely interesting because it explicitly forces you to assess base rates across an entire universe, not just in a single industry or geography. I learned a lot there, and when they made me a manager, well, that was a learning experience too. Becoming explicitly responsible for the process that produces the outcome, with limited time for direct output myself, was very interesting and formed the genesis of this site.

What were your main takeaways from Simply Wall St?

• Work with people who are more talented than you are.
• Put yourself in a position where serendipitous exchange of ideas, collaboration, and the cross-pollination of skillsets leads to magic (1+1 = 3 moments).
• The best type of management is facilitation. Once the team understands its role, the best thing management can do is focus on facilitating the team's ability to produce good work, i.e. generally getting out of the way and spend your time removing roadblocks, coordinating dependencies and so on. 
• The success of an organisation depends on its ability to apply talent with minimal frictional loss, not just to attract it.
• Org structure and processes must be continually reworked to avoid spiralling bureaucracy and maintain speed of iteration.
• The concept of org reworks (a dynamic, shifting organisation, or what I called "good transitions") should be introduced into the culture & lexicon as soon as feasible. People should understand that they will need to recurrently shift their attention to focus on the area of highest need/impact.
• Offsetting this; the organisation should not change too frequently. If the minimum effective period for delivering product is a quarter, the best versions of that product don't come until two or three quarters later, when people have had time to think, research, collaborate, and iterate.
• Domain-specific expertise is nontransferable and difficult to replace.
• There is a trade-off between process and chaos; the optimal mix is in the middle.  Too much chaos and you lose the ability to coordinate and to apply resources to pressing problems; too little and you lose the magic I described above.
• Every management decision should be approached with a conceptual dial in mind. Are you turning the needle towards or away from chaos?  Towards or away from autonomy and creativity? Towards innovation or iteration? What is the optimal mix and what outcome are you seeking with this decision? Why?  (more thoughts on this in The Rebrandening and Management: Infinite Nuance)
• "Strategy", "leadership", "direction",  "process",  "alignment" are much maligned buzzwords - but you don't know you're missing them until you haven't got them. They become critically important as an organization moves beyond the single product team stage.

I was fortunate to have met Adam and Al, and the team at SWS was outstanding.

Watchtower Stocks used IEXCloud APIs and code I wrote to generate "at a glance" descriptions for >3000 companies, allowing investors to quickly review large numbers of companies with minimal work and save interesting candidates for later research.

The important thing to understand about Leveraged was it had historically been mismanaged by Bendigo, and was starved of investment. I found a frustrated organisation set in its ways, and while Leveraged recognised & discussed openly its many challenges, it struggled greatly with change & focus due to its functional silo structure and a parent company that was more distraction than support.

This would ordinarily be no problem - I knew what I was getting into - but unfortunately the organisation was also too comfortable to change.  Australian margin lending is extremely profitable - think 70% returns on equity - and has had no new entrants for 10 years until IBKR in 2020. Consequently, Leveraged struggles to deliver the changes it needs to thrive.

One of the key things I noticed very early on was the conversion rate on the loan application funnel had halved in the last two years. I suspect this is for a combination of reasons, but it was very clear (in my opinion) that a significant amount of money was being left on the table due to customers starting a loan application and being unable to complete it. It was also drastically delaying our loan approval process.

After six months working the problem, developing a solution, and navigating it through layers of approval, the bank laid off its team responsible for implementing and the project died. More information on the process I followed can be found in this iApply Case Study.

This was the second time that centralised decision-making without full context had resulted in a meaningful reduction in the organisation's capabilities - a similar process in the email system migration I worked on resulted in us choosing the worst and most expensive of the vendors I reviewed.

I helped deliver a number of important projects there including the acquisition of the ANZ Investment Lending book, an email system deprecation & replacement and myriad other BAU initiatives but achieved only a tiny fraction of what I thought should have been possible, and ultimately resigned frustrated. 

Train your managers. One of the more common mistakes large organisations make is promoting strong ICs into management with minimal training. This results in a number of predictable and undesirable behaviours such as minimal questioning/challenging, managers being the only people who speak during meetings, fiefdoms & tribal behaviour, unresolved vision/execution conflicts, and so on.

Hierarchies destroy talent and motivation. If your approach to management is not sharing the context and simply issuing instructions, you will end up with crappy results and be frustrated by your employees' lack of knowledge, ownership, and initiative.

Optimise for productivity & clarity of direction.  High impact initiatives can be driven by a handful of people and relatively small sums of money, but you don't get these benefits when you don't know the difference between what is likely to move the needle and what isn't.

Don't join an organisation with management or cultural issues unless it's in a leadership position with clear scope to promote change.  The reason is simply that it is hard for an individual contributor to create positive change; the management team needs to buy in to those behaviours and then propagate them, which is hard in an organisation with cultural issues.

Don't take a more junior/lower salary role unless it is exquisitely clear that you will be learning immensely valuable skills, OR unless the organisation is growing rapidly and will create space under you for you to rise up. 

In 2024 I interviewed a cross-section of colleagues from my last three roles and collected their feedback on my strengths and weaknesses. Here are some of the things people remembered about me:

• "Made good hires, very clear at deciding who could stay and how to get them to the level required to do the job, on the technical front especially. Quality of hires fell off after you left."
• "In eight years in the industry, I’ve never seen anyone put as much effort into hiring and interviewing candidates. It’s a great experience to come in and find the interviewer has read their blog or listened to their podcast and is genuinely interested in them as a person."
• "Did a good job creating Briefs (new product) from scratch which was a blank slate exercise; you had the product sense to have several different ideas, create prototypes and test with audiences before iterating; and then did a good job preparing the team, setting the agenda/guardrails and creating the space to deliver."
• "Something you do very well that nobody else really does; driving informal catch ups to keep everyone on the same page, ideas & updates flowing. The organisation got more siloed after you left."
• "Building an environment of "we are colleagues focused on solving the problem" rather than a typical boss/employee relationship; you do this very well."
• "Methodical and thorough approach to everything, fantastic attention to detail, really opened my eyes to a whole other level of what high standards looks like"
• Communication real strong suit, encompasses wide range of things, feedback, setting expectations, goal setting, really clear principles for content
• "You told me I needed to back myself more because I already knew what I was doing; I kept asking for guidance when I already had the right answer. That was challenging but really helpful."
• "Promptness; quite quick with our turnover in the sense of projects & tickets; your leadership, when we got to meetings and setting goals it wasn’t unrealistic, but there was a lot of work involved and ambitious"

And my flaws? They exist for sure. The three main ones are ego, frustration/impatience, and moving past frustration to get on with the job.

• Ego is a ~solved problem, I certainly have one, but people are surprised to hear it's an issue.
• Frustration/impatience; I'm getting better at this but it is ultimately an experience thing - the more I see, the easier it gets to contextualise and understand where a problem fits, why it's happening, and how to solve it. I'd say this is about half solved, and I find frustration motivating so it's a knack of learning how to channel it rather than not becoming frustrated.
• Moving past frustration; I'm making noticeable progress with this but it's probably the earliest-stage of my three flaws.