Last updated: 21:54 / Wednesday, 6 November 2019
Interview with Boyar AM

"After the Dotcom Bubble Burst Value Investing Enjoyed a Renaissance. We See No Reason Why History Will Not Once Again Repeat Itself"

  • They look forward to benefiting from Mapfre’s already significant capabilities in ESG and European equities
  • While we currently do not have plans to launch a European product, it is certainly something we are seriously considering as we grow
  • We plan on utilizing Mapre’s distribution network in Spain to target the Spanish market

New York based Boyar Asset Management recently signed an alliance with the Spanish manager Mapfre AM, to benefit from their mutual capabilities and which will boost their businesses. In this interview with Funds Society, Jonathan Boyar, President of Boyar Research - with 11 years of investment experience, and since 2008 relocated to Boyar, where he improves the analysis and management process, as well as being in charge of institutional sales for both the research area and the management service, explains the key points about this alliance and how to plan to make a foothold, with its particular investment style, in the portfolios of the Spanish investor. Above all, because he believes that value will have have its comeback, and will shine again.

You have recently signed an asset management alliance with Mapfre AM. What will Mapfre AM bring to Boyar AM and what will Boyar AM bring to Boyar AM after the agreement?

The entire team at Boyar Asset Management is excited about entering this partnership. With Mapfre not only do we gain access to long-term patient capital allowing us to make equity investments for the long term, we will also be able to leverage their significant distribution capabilities. We are also looking forward to access to Mapfre’s expertise in both ESG investing and European equities which are two areas that interest us greatly.

Through this strategic partnership, Mapfre will gain access to our expertise in long-term catalyst driven value investing which we have been practicing since 1975. Mapfre will also gain from the knowledge of our team of seasoned investment professionals. 

Is Boyar AM looking for greater expertise in European equities thanks to Mapfre?

While we currently do not have plans to launch a European product, it is certainly something we are seriously considering as we grow. We look forward to beinging able to leverage Mapfre’s expertise in this area when the timing is right.

And are you also looking for ESG capabilities? Do you think it's a trend with potential?

ESG is here to stay. It certainly is not a fad. Many well-respected money managers have adopted this practice and we look forward to benefiting from Mapfre’s already significant capabilities in this area.

With this alliance, will Boyar AM also seek to position itself in the Spanish market?

Absolutely. We plan on utilizing Mapre’s distribution network in Spain to target the Spanish market. We think this audience will embrace a long-term value-oriented investment style.

Boyar AM is a value asset manager and it will offer Mapfre its expertise in asset management in the US. What characteristics distinguish its investment style from other value houses, what characterizes its investment methodology in the US?

Boyar is quite different than most money managers as we take a private equity approach to public markets.  Since 1975, our flagship publication (which through another entity we sell on a subscription basis), Asset Analysis Focus (AAF), has been read regularly by some of the world’s most sophisticated investors. In keeping with AAF’s mandate of uncovering undervalued stocks, we use that same research to build and manage individualized portfolios for our money management clients. Many money management firms claim to do their own research—but we can prove it.

Based on that research, we invest in companies whose stock is trading significantly below what we believe the entire company is worth—believing that within a reasonable period of time, the stock market will reflect (or an acquirer will purchase the company for) its intrinsic value.

Unlike many value managers we are focused on identifying catalysts that we believe will help the stock ascend in value over a reasonable period of time. We believe by identifying these catalysts it helps us to avoid value traps.

Is it difficult now, with valuations at high levels in the US, to look for opportunities, undervalued companies? In this sense, what levels of liquidity do you have in your funds?

While the overall market is somewhat expensive by historical standards. We are finding many names in the small and mid-cap area that are selling at significant discounts to what we believe the company is truly worth. This market has been led by a handful of mostly mega cap technology shares, at some point the leadership will change and we believe investors like us that stick to their style through both  think and thin will be rewarded for their patience.

Value is not at its best... the performance has been bad compared to growth in recent times. Why and do you think this situation will change in the short term?

2019 has been yet another year when growth stocks have simply trounced value shares. The outperformance was consistent across all market capitalizations. The most expensive stocks continue to get more expensive, while the cheapest companies utilizing any acceptable metrics keep getting less expensive. At some point this trend will reverse course, as it always does. We just can’t predict the timing. On an absolute basis, value shares (just like prior to the dotcom crash) have posted respectable numbers but compared to growth stocks they significantly underperformed. Value investors were rewarded for their patience after the dotcom bubble burst and value investing enjoyed a renaissance. We see no reason why history will not once again repeat itself.

In Spain in recent years, managers have emerged with this style of investment and a lot of talent (Cobas AM, Magallanes, azValor, Horos AM ...): do you know Spanish talent? Do you have any Spanish manager value among your references?

These are certainly people I know of by reputation and I have spoken at conferences where they have also presented, but I unfortunately do not know them personally. I would welcome the opportunity to meet some of them.

In an environment of increasing competition and polarisation in the asset management industry (and where scale matters more than ever)... do you believe that alliances are a good alternative to mergers between entities?

Anytime two smart organizations are able to share knowledge, ideas and best practices it is a win for everyone involved.

Do you think we will see a lot of M&A in the sector? Is a strong consolidation necessary? Or will we see more alliances and cooperation as a way of joining forces in this scenario?

I think due to compressing margins there will certainly be consolidation in the sector. Scale certainly matters, but I also think investors appreciate boutiques like ours that are able to invest outside of the mainstream. They understand as the great Sir. John Templeton once said, If you buy the same securities everyone else is buyingyou will have the same results as everyone else.