Marais began in the field with no expertise. Trained as a physicist, he was tempted away from science when a friend introduced him to Allan Gray, the founder of the funds management company bearing his name, in 1991. Marais became a director in two years. Within five years, he was chief investment office and by 2001, he was chairman.
Marais insists recruits in the Australian office are also new to the field. He looks for smart people, trains them, and “gives them a chance”. He says he now “probably has too many” staff – 25 – but maintains his recruitment of non-professionals. “Financial services overpay relative to other industries. You can get much better people; we hire PhDs from all over the world and can attract them to us.”
The father of three came to Australia to escape the gloomy weather of London, where he headed Allan Gray’s operations for three years.
Marias jumped at Gray’s offer of a joint venture for the Australian operation. Although staff received some equity last year, Marais says he still owns nearly half of the company.
The ASX offered opportunities to excel at Marais’ main game: buying underperforming stocks and taking a role in seeing them improve. It takes time, usually between three and five years, to see the results.
It’s called value investing by one of the veterans of a similar approach, Robert Maple-Brown, the founder of Maple Brown Abbot. Although Maple-Brown has retired as the head of that fund, it is still active and can be found on the same share registers as Allan Gray.
Marais prefers the tagline “contrarian investing”. He has it emblazoned on the company website; “Therefore, the shares we invest in are often widely disliked by the broking community and vilified in the popular press. Being contrarian is the most difficult of investment disciplines, but also the most rewarding over the long-term.”
Critics of shareholder activism complain that investors do not know the ins and outs of the companies they back, the real coalface problems, but Marais is not having a bar of it. “If they were that clever, how come they let the executive salary thing get so out of hand?” he says. “If they really have on-the-ground-understanding, I am happy to go with them as long as they say, I will be personally liable if it all goes wrong. That is not what they do.”
Biotechnology company, Acrux, is Marais’ best performer.
Among his first batch of investments in 2006, when its stock price hovered between 50 and 60 cents, the company did not have a product, or revenue at the time, let alone a profit.
Acrux is the exception to Marias’ portfolio, having been little trouble under the leadership of CEO Richard Treagus, and chair and early investor, Ross Dobinson. The company has made license deals worth close to $100 million.
Today, the share price is worth around $4, an 800% increase.
This article first appeared on LeadingCompany.
Andrew Sadauskas is a former journalist at SmartCompany and a former editor of TechCompany.
