With approximately $400 million of funds under management and a focus on long-term investing, Forager Funds is a unique Australian asset management company.
Now with a ten-year track record, Forager is a sustainable business but remains nimble enough to invest in smaller listed companies not accessible to many investment managers.
The company is majority owned by staff, and Forager’s external shareholders support the desire to place performance before revenue. That means capping the size of funds before too much money becomes an impediment to performance.
Key investment staff are strongly aligned with investors through co-investment and equity in the Forager business.
As the Forager name suggests, our style of investing involves scouring the world looking for unloved opportunities. Perhaps best described as a hybrid of the Graham and Buffett styles, we view both asset backing and earnings power as useful valuation tools, depending on the type of business we are investing in.
Like Buffett, we like buying high quality businesses if they are available at reasonable prices. But, like Graham, we also believe there is an appropriate price for everything.
Our small size gives us the flexibility to do just that. If the potential returns are high enough, we have no qualms investing in unknown businesses. And if the situation demands it, we are prepared to be activist in order to realise the value inherent in a company’s shares. Both approaches have worked well for us over the years and our aim is to stay.
Our aim for both high quality businesses and less well known companies is to buy shares at prices we believe to be substantially less than their underlying value. Then we wait for the market to correct this mispricing.
This is more difficult than it sounds, which is why we have a rigorous research process and healthy debate within the team. Businesses change and stock valuation is an inexact science, so we only invest in stocks where the gap between our estimate of value and the current share price is large enough to compensate for the uncertainty.
Over 20 years ago, a stock-market newsletter called The Intelligent Investor was founded. The aim was to make the opaque and conflicted world of investing accessible to a growing army of DIY investors. The founders were joined in 2001 by value investing fanatic Greg Hoffman, who still sits on the Forager Board. In 2004, Greg roped his childhood friend and fellow value investing fanatic Steve Johnson, now Forager’s Chief Investment Officer, into a buyout of the company.
In 2009, Steve launched a funds management business, Intelligent Investor Funds. The aim was to provide subscribers to The Intelligent Investor access to the smaller, sometimes more complicated investment opportunities still associated with the Forager Australian Shares Fund today.
The funds management business grew and the International Shares Fund was established in early 2013. In 2014, the newsletter, along with the Intelligent Investor brand, was sold to ASX-listed company Australasian Wealth Investments.
Intelligent Investor Funds Management, still owned by Steve, Greg and the other shareholders, was renamed Forager Funds Management in July 2014.
Alignment with Investors
Our commitments to investors are as follows:
First, we invest our money alongside yours. Second, we plan to restrict the amount of money we accept so that we can stay small and nimble. Third, we will communicate in a clear and transparent way.
It’s our belief that, along with tried and true value investing principles, these commitments give us the best possible chance of success.
Forager’s staff invest a significant portion of their wealth alongside you. And we have committed to limiting the funds to a size that allows them to remain invested in small to medium sized stocks.
One of our competitive advantages is an aligned and patient investor base.
At Forager, attracting the right sort of investor is more important than attracting investors per se.