Rich Lister Rod Jones founded one of the world’s biggest educational groups, Navitas. He stepped down as CEO in June and is now an active investor through his family office Hoperidge Capital. But Mr Jones, with an estimated worth of $450 million, has taken to the sidelines, arguing stockmarket values are too high and property prices will continue to soften along the east coast.
What do you look at when investing in companies?
I look at various key factors, including the quality of management, the timing of the product in the market, the business model, valuation, funding plan, structure, and what competitive advantage the company has.
How do you measure the value of a non-income producing growth company?
I look at the size of the opportunity and the likelihood of the business to be able to successfully deliver on its plan. Then I determine what level of return I would be happy with for the risk being taken to come to an estimate of value.
Do you think we are on a fintech bubble?
I think values are high across all asset classes, including tech and fintech. Perhaps not a bubble in the classical sense, but many assets are priced for perfection at present.
Do you think the market is currently over valued?
Which stocks are catching your eye?
Several stocks are eye catching because of their high valuations at present. Less stocks are eye catching because of the good value they present. I am not actively buying many new companies at present because it is hard to find cheap, high quality businesses.
What is the dream company you’d love to own (on the ASX) indiscriminate of its valuation?
Navitas, of course.
Do you think value investing will make a comeback?
There will always be cycles in investing, and without doubt value will come back into vogue at some stage. It may not be for a while, and it may take a market dislocation to swing the pendulum back to value, but there is no doubt that at some stage value will reign supreme once again.
Property markets are softening in Melbourne and Sydney and continue to soften in Perth, what’s your expectations for the market over the next 12 months?
I have been selling some property on the east coast over the last 12 months as prices got silly. I am glad I sold some as I think the softening trend will continue for the next year or two.
Best bit of advice you can give someone with $50,000 to invest?
Invest for the long-term and only back the highest quality management teams.
Worst investment you’ve made?
I invested in an oil and gas drilling company prior to the oil price collapse. Drilling activity completely dried up, and the business went from having a full pipeline of work, to nothing at all. The lesson from that was to avoid investing in businesses where the main determinant of success is a commodity price which can neither be accurately forecast nor controlled.
Do you have an investment idol or someone you admire?
Warren Buffett is the obvious choice, but for good reason. His annual letters to shareholders contain a wealth of knowledge, and he is the epitome of a long-term investor.