Antipodes’ Ross says short-term wealth hinges on US election

The portfolio manager says defensive stocks pose a bigger risk than the magnificent seven for investors that are overexposed to the American sharemarket.
Vihari Ross of Antipodes. Picture: Louie Douvis

Jonathan Shapiro

Antipodes’ Ross says short-term wealth hinges on US election

November 5, 2024
The portfolio manager says defensive stocks pose a bigger risk than the magnificent seven for investors that are overexposed to the American sharemarket.
Read Transcript

Vihari Ross is still a little traumatised by Donald Trump’s time in the White House.

Like many Australians, the former head of research at Magellan had headed to Byron Bay for a summer break in December 2017 just as the former US president unveiled a Christmas gift to the nation in the form of tax cuts. “I was in the car trying to update my models and hot-spotting to my phone to upload them,” she recalls.

Trump’s presidency was chaotic, unpredictable, and disruptive in every sense of the word. But while he divided the nation, he also united the sharemarket bulls who are once again excited at the prospect of his return to Washington.

Ross has since joined global fund manager Antipodes as a portfolio manager and warns that there is an air of complacency around the outcome of the election and its consequences.

Quality and growth are both expensive relative to their history and the value factor.
— Vihari Ross, Antipodes

She is among the presenters at next week’s Sohn Hearts & Minds charity conference in Adelaide. “Everyone believes Trump was good for the economy in 2016,” she says. “The economy was just good in 2016, and he happened to be the president then.”

The direction of the economy and how the central bank handles monetary policy still matters more to her than who is in charge.

She is not convinced of the election outcome or if Trump’s playbook is all that reliable. That is, the US dollar could offset tariffs, an end to central bank independence could spook bond markets that are already worried about rising deficits, and support of the energy sector could be deflationary.

However, Ross says the enormous US exposure amassed by superannuation funds means that the election matters more to short-term wealth in Australia than ever before.

Ross and Antipodes think global investors are over-exposed to the US sharemarket, which is both over-concentrated and expensive. The firm is sticking to its value approach to investing, and while the American market remains its largest exposure, it has spread more of its bets into Europe and Asia.

Ross says extreme levels of market concentration are unusual, but not unprecedented. She is as worried about excessive valuations in parts of the market as she is about the high concentration.

In fact, she adds, that some of the magnificent seven tech stocks that dominate the US sharemarket do stack up on valuation grounds. The fund owns three of the seven – Amazon, Microsoft and Meta.

Instead, she says that some of the so-called high-quality companies – defined by high levels of profitability – are excessively valued as investors overpay for durability.


A head scratcher


“Quality and growth are both expensive relative to their history and the value factor,” she says. The examples she cites are Mexican food chain Chipotle and big box retailer Costco, which are both trading at multiples of 50 times next year’s earnings compared to 30 times in the past.

Both companies are growing profits by around 10 per cent a year, yet are more expensive than Microsoft, which is beating them on growth and profitability and is generating more cash flow.

Another head-scratcher for Ross is the disconnect when it comes to China. Global investors have labelled the Asian nation as “uninvestable” and are overlooking its sharemarket in favour of Indian stocks – or even Australian banks.

But she says that hasn’t stopped them from bidding up US-listed stocks that rely on China to support their growth, such as Starbucks, Nike, hotel chain Marriott, and even Elon Musk’s Tesla. Nike and Starbucks, for example, rely on China for 60 per cent of its growth. That created a valuation mismatch between highly defensive Chinese companies and US firms with links to China that investors continue to buy and are arguably more exposed to.

Ross is making her debut at the Sohn conference on November 15 where fund managers will pitch their highest conviction stock. She is not giving too much away other than to confirm her pick is outside the US.

Could it be a European bank? The sector hasn’t been a source of lucrative sharemarket returns, but Antipodes did make money buying into Italian lender UniCredit.

Ross says her team is now leaning towards France’s Société Générale, which is well-capitalised and should benefit if long-term European bond rates increase. It has also built a fast-growing digital bank.

The stock is trading at a multiple of just three times next year’s earnings, and Antipodes analysts estimate the bank will return 50 per cent of its market capitalisation to shareholders in the form of dividends and buybacks over the next three years.

“That’s a nice return that blows CBA out of the water.”

The Australian Financial Review is a media partner of Sohn Hearts & Minds. 

This article was originally posted by The Australian Financial Review here.

Licensed by Copyright Agency. You must not copy this work without permission.

Disclaimer: This material has been prepared by The Australian Financial Review, published on 5 November 2024. HM1 is not responsible for the content of linked websites or content prepared by third party. The inclusion of these links and third-party content does not in any way imply any form of endorsement by HM1 of the products or services provided by persons or organisations who are responsible for the linked websites and third-party content. This information is for general information only and does not consider the objectives, financial situation or needs of any person. Before making an investment decision, you should read the relevant disclosure document (if appropriate) and seek professional advice to determine whether the investment and information is suitable for you.

Vihari Ross is still a little traumatised by Donald Trump’s time in the White House.

Like many Australians, the former head of research at Magellan had headed to Byron Bay for a summer break in December 2017 just as the former US president unveiled a Christmas gift to the nation in the form of tax cuts. “I was in the car trying to update my models and hot-spotting to my phone to upload them,” she recalls.

Trump’s presidency was chaotic, unpredictable, and disruptive in every sense of the word. But while he divided the nation, he also united the sharemarket bulls who are once again excited at the prospect of his return to Washington.

Ross has since joined global fund manager Antipodes as a portfolio manager and warns that there is an air of complacency around the outcome of the election and its consequences.

Quality and growth are both expensive relative to their history and the value factor.
— Vihari Ross, Antipodes

She is among the presenters at next week’s Sohn Hearts & Minds charity conference in Adelaide. “Everyone believes Trump was good for the economy in 2016,” she says. “The economy was just good in 2016, and he happened to be the president then.”

The direction of the economy and how the central bank handles monetary policy still matters more to her than who is in charge.

She is not convinced of the election outcome or if Trump’s playbook is all that reliable. That is, the US dollar could offset tariffs, an end to central bank independence could spook bond markets that are already worried about rising deficits, and support of the energy sector could be deflationary.

However, Ross says the enormous US exposure amassed by superannuation funds means that the election matters more to short-term wealth in Australia than ever before.

Ross and Antipodes think global investors are over-exposed to the US sharemarket, which is both over-concentrated and expensive. The firm is sticking to its value approach to investing, and while the American market remains its largest exposure, it has spread more of its bets into Europe and Asia.

Ross says extreme levels of market concentration are unusual, but not unprecedented. She is as worried about excessive valuations in parts of the market as she is about the high concentration.

In fact, she adds, that some of the magnificent seven tech stocks that dominate the US sharemarket do stack up on valuation grounds. The fund owns three of the seven – Amazon, Microsoft and Meta.

Instead, she says that some of the so-called high-quality companies – defined by high levels of profitability – are excessively valued as investors overpay for durability.


A head scratcher


“Quality and growth are both expensive relative to their history and the value factor,” she says. The examples she cites are Mexican food chain Chipotle and big box retailer Costco, which are both trading at multiples of 50 times next year’s earnings compared to 30 times in the past.

Both companies are growing profits by around 10 per cent a year, yet are more expensive than Microsoft, which is beating them on growth and profitability and is generating more cash flow.

Another head-scratcher for Ross is the disconnect when it comes to China. Global investors have labelled the Asian nation as “uninvestable” and are overlooking its sharemarket in favour of Indian stocks – or even Australian banks.

But she says that hasn’t stopped them from bidding up US-listed stocks that rely on China to support their growth, such as Starbucks, Nike, hotel chain Marriott, and even Elon Musk’s Tesla. Nike and Starbucks, for example, rely on China for 60 per cent of its growth. That created a valuation mismatch between highly defensive Chinese companies and US firms with links to China that investors continue to buy and are arguably more exposed to.

Ross is making her debut at the Sohn conference on November 15 where fund managers will pitch their highest conviction stock. She is not giving too much away other than to confirm her pick is outside the US.

Could it be a European bank? The sector hasn’t been a source of lucrative sharemarket returns, but Antipodes did make money buying into Italian lender UniCredit.

Ross says her team is now leaning towards France’s Société Générale, which is well-capitalised and should benefit if long-term European bond rates increase. It has also built a fast-growing digital bank.

The stock is trading at a multiple of just three times next year’s earnings, and Antipodes analysts estimate the bank will return 50 per cent of its market capitalisation to shareholders in the form of dividends and buybacks over the next three years.

“That’s a nice return that blows CBA out of the water.”

The Australian Financial Review is a media partner of Sohn Hearts & Minds. 

This article was originally posted by The Australian Financial Review here.

Licensed by Copyright Agency. You must not copy this work without permission.

Disclaimer: This material has been prepared by The Australian Financial Review, published on 5 November 2024. HM1 is not responsible for the content of linked websites or content prepared by third party. The inclusion of these links and third-party content does not in any way imply any form of endorsement by HM1 of the products or services provided by persons or organisations who are responsible for the linked websites and third-party content. This information is for general information only and does not consider the objectives, financial situation or needs of any person. Before making an investment decision, you should read the relevant disclosure document (if appropriate) and seek professional advice to determine whether the investment and information is suitable for you.

Disclaimer: This material has been prepared by Australian Financial Review, published on Nov 05, 2024. HM1 is not responsible for the content of linked websites or content prepared by third party. The inclusion of these links and third-party content does not in any way imply any form of endorsement by HM1 of the products or services provided by persons or organisations who are responsible for the linked websites and third-party content. This information is for general information only and does not consider the objectives, financial situation or needs of any person. Before making an investment decision, you should read the relevant disclosure document (if appropriate) and seek professional advice to determine whether the investment and information is suitable for you.

facebook
linkedin
All
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
March 14, 2025

$1.4 million boost for SA medical research

South Australian medical research will receive a $1.4 million cash injection, as a direct result of a major investment and philanthropy conference held in Adelaide.

Read More
Anthony Scaramucci’s time in the White House was brief but memorable. APAnthony Scaramucci’s time in the White House was brief but memorable. APAnthony Scaramucci’s time in the White House was brief but memorable. APAnthony Scaramucci’s time in the White House was brief but memorable. AP
May 19, 2025

Why ‘The Mooch’ thinks Trump is more dangerous this time around

Anthony Scaramucci says Trump has fewer constraints on his worst instincts in his second administration. But he still gets bored easily.

Read More
Image caption: Anthony “The Mooch” Scaramucci at the New York headquarters of his SkyBridge Capital last week. Picture: Jaclyn LichtImage caption: Anthony “The Mooch” Scaramucci at the New York headquarters of his SkyBridge Capital last week. Picture: Jaclyn LichtImage caption: Anthony “The Mooch” Scaramucci at the New York headquarters of his SkyBridge Capital last week. Picture: Jaclyn LichtImage caption: Anthony “The Mooch” Scaramucci at the New York headquarters of his SkyBridge Capital last week. Picture: Jaclyn Licht
May 19, 2025

My biggest mistake: Anthony Scaramucci on what makes Donald Trump tick

On Elon Musk, money and the White House, fast-talking Wall Street hedge fund manager and former Trump communications director Anthony Scaramucci tells it as he sees it.

Read More
A bull case for Bitcoin even as it trades near record levels. Picture: AFPA bull case for Bitcoin even as it trades near record levels. Picture: AFPA bull case for Bitcoin even as it trades near record levels. Picture: AFPA bull case for Bitcoin even as it trades near record levels. Picture: AFP
May 19, 2025

Bitcoin ‘on track’ for $US200,000: Anthony Scaramucci

Bitcoin could hit as much as $US200,000 ($311,000) by the end of this year, fuelled by surging inflows into exchange-traded funds and Donald Trump’s erratic policymaking.

Read More
Anthony Scaramucci says America has no choice but to lower tariffs on China further. Jaclyn LichtAnthony Scaramucci says America has no choice but to lower tariffs on China further. Jaclyn LichtAnthony Scaramucci says America has no choice but to lower tariffs on China further. Jaclyn LichtAnthony Scaramucci says America has no choice but to lower tariffs on China further. Jaclyn Licht
May 19, 2025

‘The Mooch’ says Trump will have to cut China tariffs below 10pc

Scaramucci, who is best known as The Mooch, is the first big-name global investor to be confirmed for the Sohn Hearts & Minds conference in Sydney in November.

Read More
December 19, 2024

Rikki Bannan – Don’t get caught up in momentum

Conference Fund Manager Rikki Bannan, Executive Director at IFM Investors, joins Equity Mates to discuss her standout 2023 stock pick, Telix, and explore what opportunities lie ahead.

Read More
Nick Moakes of the Wellcome Trust told the Sohn Hearts & Minds conference that some investors were too optimistic about a reduction in rates. Picture: Ben SearcyNick Moakes of the Wellcome Trust told the Sohn Hearts & Minds conference that some investors were too optimistic about a reduction in rates. Picture: Ben SearcyNick Moakes of the Wellcome Trust told the Sohn Hearts & Minds conference that some investors were too optimistic about a reduction in rates. Picture: Ben SearcyNick Moakes of the Wellcome Trust told the Sohn Hearts & Minds conference that some investors were too optimistic about a reduction in rates. Picture: Ben Searcy
November 20, 2024

Trump unifies top investors in decade-long bullish outlook for US

Nick Moakes, CIO of the $72 billion Wellcome Trust, told the conference that too many investors were banking on a return to the ultra-low interest rates that prevailed over the past decade.

Read More
Wall Street legend Howard Marks told the Sohn event that US exceptionalism would endure. Picture: Ben SearcyWall Street legend Howard Marks told the Sohn event that US exceptionalism would endure. Picture: Ben SearcyWall Street legend Howard Marks told the Sohn event that US exceptionalism would endure. Picture: Ben SearcyWall Street legend Howard Marks told the Sohn event that US exceptionalism would endure. Picture: Ben Searcy
November 17, 2024

Is anyone brave or stupid enough to bet against America?

Stock pickers have been punished for betting against the US. The choice between consensus and contrarianism on American exceptionalism is now harder than ever.

Read More
Ellerston Capital's Chris Kourtis says things will improve at embattled fund manager Perpetual. Picture: Ben Searcy PhotographyEllerston Capital's Chris Kourtis says things will improve at embattled fund manager Perpetual. Picture: Ben Searcy PhotographyEllerston Capital's Chris Kourtis says things will improve at embattled fund manager Perpetual. Picture: Ben Searcy PhotographyEllerston Capital's Chris Kourtis says things will improve at embattled fund manager Perpetual. Picture: Ben Searcy Photography
November 15, 2024

Eleven stock tips from Sohn to get you through 2025

“There’s no finer place for the finance festival than in the festival city,” said Matthew Grounds. He, along with fellow Barrenjoey co-executive chairman Guy Fowler and investor Gary Weiss, is one of Sohn’s driving forces.

Read More
November 15, 2024

Howard Marks and Sohn’s big stars reveal seven rules for investing

Among the stock picks and stunts at the Sohh Hearts & Minds event, Howard Marks and Nick Moakes provided investors with long-term rules for playing markets.

Read More
November 15, 2024

Sohn ASX stock pick: Ellerston Capital’s Chris Kourtis backs Perpetual

Chris Kourtis has put his biggest bet on embattled Perpetual – picking one of the most hated stocks on the ASX – that he believes will soon be the ‘cheapest listed asset manager of scale in the universe’.

Read More
Markets will have to adjust to a world in which a new Donald Trump presidency will continue to ‘bash’ Xi Jinping’s China. Picture: AFPMarkets will have to adjust to a world in which a new Donald Trump presidency will continue to ‘bash’ Xi Jinping’s China. Picture: AFPMarkets will have to adjust to a world in which a new Donald Trump presidency will continue to ‘bash’ Xi Jinping’s China. Picture: AFPMarkets will have to adjust to a world in which a new Donald Trump presidency will continue to ‘bash’ Xi Jinping’s China. Picture: AFP
November 15, 2024

Sohn investors position for bullish but bumpy Trump ride

Australia and the rest of the world must adjust to a new Trump presidency that will deliver an expected bull market but also disruption, with the leader in waiting prepared to “create pain” to get his way.

Read More
November 15, 2024

Sohn stock picker experts name best shares to invest in for year ahead

‍Don’t overlook down and out silver miners, legacy skincare brands ready for a revival and a big financial company suffering from a severe case of shareholder wealth destruction.

Read More
November 15, 2024

Sohn: NYSE-listed Estee Lauder’s Northcape Capital pick

Northcape Capital’s Fleur Wright this gives a rare opportunity to buy a high quality company at an attractive price.

Read More
Mike Novogratz, CEO of Galaxy Digital. Photo: Jutharat Pinyodoonyachet/BloombergMike Novogratz, CEO of Galaxy Digital. Photo: Jutharat Pinyodoonyachet/BloombergMike Novogratz, CEO of Galaxy Digital. Photo: Jutharat Pinyodoonyachet/BloombergMike Novogratz, CEO of Galaxy Digital. Photo: Jutharat Pinyodoonyachet/Bloomberg
November 9, 2024

Galaxy Digital CEO Mike Novogratz believes bitcoin will hit $US100k

Bitcoin’s bounce to record highs in recent days is only the beginning of a fresh surge higher for cryptocurrency, says US billionaire Mike Novogratz.

Read More
December 10, 2024

Professor Jane Butler: Sparking Hope for Spinal Cord Injuries

In this episode of the Hearts & Minds Podcast, we sit down with Professor Jane Butler to discuss her groundbreaking research into spinal cord injuries.

Read More
impact-podcasts
September 24, 2024

Asian Market Potential with Tom Naughton of Prusik

CIO Charlie Lancaster sits down with Tom Naughton, CIO of Prusik Investment Mgmt. Tom shares his investment philosophy, the opportunities and challenges in Asian markets, and how his 2023 conference stock pick, Swire Pacific (0019.HK), delivered an impressive 30% return.

Read More
investing
September 4, 2024

Building Hearts and Minds with Co-Founders Matthew Grounds and Guy Fowler

In this episode, co-founders Matthew Grounds AM and Guy Fowler OAM discuss their journey in building Hearts & Minds and its philanthropic model that has donated over $70 million to medical research.

Read More
investing
June 25, 2024

Navigating the Resource Sector with Jeremy Bond of Terra Capital

In this episode, we chat with Jeremy Bond, Founder of Terra Capital and HM1 Conference Fund Manager. Tune in for insights into the world of resource investments and the exciting opportunities that lie ahead.

Read More
investing
June 11, 2024

Prof. Nadia Badawi on Cerebral Palsy Breakthroughs and Neonatal Care

Dive deep into the groundbreaking work of Professor Nadia Badawi, an internationally recognised neonatologist and expert in Cerebral Palsy.

Read More
impact-podcasts
May 28, 2024

Investment Insights: Rikki Bannan on Top Picks and Trends

Join us for an engaging episode featuring Rikki Bannan, Portfolio Manager of IFM Investors and HM1 Conference Fund Manager. This episode explores Rikki's career journey, investment strategies, and her 2023 conference stock pick, Telix Pharmaceuticals (ASX.TLX).

Read More
investing
December 6, 2023

Peter Cooper talks building and instilling a culture of humility and excellence

In this episode, our guest is the renowned investor, Peter Cooper, founder and Chief Investment Officer of Cooper Investors (Core Fund Manager). A founding supporter of Hearts and Minds, Peter is a staunch advocate of our model and its philanthropic purpose, actively engaging in every facet of Hearts and Minds.

Read More
investing
November 28, 2023

Jun Bei Liu on her high conviction investment strategy

In this episode, HM1 Chief Investment Officer Charlie Lanchester is joined by Jun Bei Liu. Jun Bei is the Portfolio Manager of Tribeca’s Alpha Plus Fund and since taking over managing the Fund, she has quadrupled AUM.

Read More
investing
November 21, 2023

The world of rare genetic disease research

In this episode, we speak to Associate Professor Gina Ravenscroft. Gina is an Associate Professor in Neurogenetics at the Harry Perkins Institute of Medical Research in Perth. Her research interests are in rare genetic diseases, with a particular focus on neurogenetic diseases in babies and children.

Read More
impact-podcasts
November 14, 2023

Learn what makes a high conviction investment and how to avoid short-term noise

In this episode, our Core Fund Manager Magellan shares how they select top stocks for the HM1 portfolio.

Read More
investing
November 7, 2023

Delve into the world of kids critical care and trauma research

In thie episode, we are joined by Dr. Marino Festa, or Rino for short. He is the Medical Director of NSW Kids ECMO Referral Service and a senior specialist in Paediatric Intensive Care at Children’s Hospital at Westmead.

Read More
impact-podcasts
October 31, 2023

Where Regal's Phil King is searching for opportunities

HM1's CIO, Charlie Lanchester, talks to Phil King of Regal Funds about his passion for stocks, his ongoing search for opportunities, and some of the sectors he’s excited by right now. Phil King of Regal Funds, has been a tremendous supporter of Hearts & Minds since the beginning.

Read More
investing
October 24, 2023

Preventing recurrent miscarriages and birth defects

In this episode, CEO Paul Rayson is joined by renowned biomedical researcher Professor Sally Dunwoodie. Prof. Dunwoodie's groundbreaking work has revolutionised clinical practices and enabled genetic diagnostic tests worldwide. In 2017, her team achieved a double breakthrough with the potential to prevent recurrent miscarriages and various birth defects.

Read More
impact-podcasts
October 17, 2023

Nick Griffin on how he finds global winners

In this episode, CIO Charlie Lanchester chats with Nick Griffin, the founding partner and CIO of Munro Partners, one of HM1's Core Fund Managers. They go over his career to date, reflect on the lessons he’s learned, and trace the decisions that led to him starting Munro.

Read More
investing
October 10, 2023

How A/Prof Matt Call is teaching our body to kill cancer

In this episode, CEO Paul Rayson is joined by WEHI’s Associate Professor Matt Call to talk about his incredible research. Matt’s team teaches and trains the body's own immune cells to target and kill cancer cells.

Read More
impact-podcasts

No results found.

Please try a different search keyword or filter.