Steve Johnson has tested the loyalty of long-time investors after a “horror” five years, but he says owning more large caps has helped turn performance around.
Stock picker Steve Johnson has tested the loyalty of his long-time investors after a “horror” five years that saw wild swings in performance and left the fund manager stranded in companies like iSelect and Thorn Group that were hit by a brutal rout in small cap stocks.
“We literally got stuck in some stocks that we could not sell unless we were willing to take a hit. The market went through a value-investing bear market and these companies did not perform the way that we expected them to perform.”In the case of iSelect, an insurance and utility comparison company, the shares were bought at around 50¢ the year before and would hit 13¢ in 2022. He bought financial services firm Thorn Group at $1.40 in 2016 which dived to just 5¢ in 2020.
Forager only has about 1 per cent of the portfolio still invested in the airline after buying the stock at around $4 on the premise that “people are not appreciating the recovery that’s going to happen” from the pandemic. Qantas is now trading at $6.12. The middle child of a farming family in the rural NSW town of Wellington, Johnson says while he’s very comfortable being an outsider, he’s also a “very logical rational person”. After a disastrous start at university studying engineering , a random job in the mailroom at UBS set him on the path to funds management.
In the current environment, amid market fears of a consumer-led recession, Johnson has “sharpened the pencils on the retail sector”. While he hasn’t yet bought shares,
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