CALIFORNIAN Paul Davis will be calling the shots on the investment portfolio of Australasia’s first capital guaranteed investment fund from his Port Levy farm on Banks Peninsula.
Capital Guaranteed Investments has appointed Australian firm TechInvest, founded by Mr Davis, as the manager of its Orb Technology investment fund. It aims to raise between A$25 million and $150 million from private and institutional investors in New Zealand and Australia to invest in American listed technology stocks.
As chief investment officer, Mr Davis will decide where to invest the funds, spending three weeks a month telecommuting from Port Levy and the remainder of his time in Sydney and overseas.
Mr Davis says managing a big tech fund from Port Levy raises few obstacles.
He already manages the Australian-listed A$37 million Technology Investment Fund, which has outperformed the admittedly sick American Nasdaq index by 6.8 per cent a year since it was established in December 1999.
TechInvest tends to take positions in investments for six to 18 months “based on insight of technology trends and financial analysis”.
“It’s a great thing to be able to live in a rural setting and export services,” Mr Davis says.
Born and raised in Silicon Valley, Mr Davis was involved in the launch of IBM’s first range of personal computers before moving into technical, sales and management roles in the software industry.
He came to New Zealand in the mid-1980s to take an MBA at Otago and later managed the technology investments of financial services giant BT in Australia, before founding TechInvest in 1997 then moving to Banks Peninsula.
The Orb Technology fund will run for eight years, with investors guaranteed to get their original stakes back or 80 per cent of the highest year-end value of the fund — whichever is higher — should the tech market take another downward turn.
The capital guarantee is provided by the world’s largest financial services firm, Citibank, which is also letting Orb Technology leverage its investment funds by one dollar for every two, so it can in effect borrow to bet more on a rising market.
Mr Davis says that despite the dot-com meltdown, people who held tech stocks for eight years at any time during the past 30 years would have come out ahead of the broader equities market two-thirds of the time.
“People are frightened of technology because they have seen so much money lost, but you don’t want to go into the market at the top but at the bottom.”
He contends many people in New Zealand and Australia with managed investments and pension funds tend to be underweight in technology stocks — particularly in Australia where more than 50 per cent of investment funds are typically invested onshore.
Mr Davis says TechInvest has a conservative approach, backing companies showing profitable growth.
“We are pretty happy with the medical sciences sector, biotechnology and pharmaceuticals, network services and, in particular, broadband companies and with Internet companies which are actually showing profits now — the companies that are left are doing very well and are not overvalued.
“We don’t particularly like local and long distance phone companies and we definitely don’t like telco equipment and semiconductor equipment companies. They have overcapacity issues and we don’t see happy fundamentals there for some time.”
The Orb Technology fund closes for investors on September 12.
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