Jason Del Vicario of Hillside Wealth Management.Illustration by Joel kimmel
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Money manager Jason Del Vicario thinks investors should stop guessing if interest rates will drop or stay higher for longer and focus instead on buying companies they want to hold well after the dust settles.
“We are long-term focused and pay very little attention to short-term noise, except to keep tabs on when assets we own or want to own fall below our estimate of fair value. Then we perk up, confirm or disprove our thesis and act accordingly,” says Mr. Del Vicario, portfolio manager with Hillside Wealth Management at iA Private Wealth Inc. in Vancouver, who oversees about $200-million in assets.
The buy-and-hold strategy has helped Mr. Del Vicario outperform some benchmarks. His balanced fund, which has a mix of 70 per cent equities and 30 per cent bonds, returned 5.7 per cent over the 12 months ended March 31. That compares with a drop of 2.3 per cent for Vanguard Balanced ETF Portfolio VBAL-T, which is roughly 60 per cent equities and 40 per cent bonds, over the same period.
Since its inception in September, 2014, Mr. Del Vicario’s fund has seen an annual compound return of 7.7 per cent as of March 31, compared with a return of 4.8 per cent for Vanguard Balanced ETF Portfolio. All data are based on total returns and Mr. Del Vicario’s performance is net of fees, which averages 1.5 per cent.
The Globe and Mail spoke with Mr. Del Vicario recently about what he’s been buying and selling and the stock he wished he didn’t sell that’s been in the news a lot lately.
Describe your investing style.
We own about 20 to 30 businesses that we acquired at attractive prices with the goal of holding them for decades. Most of the businesses we own, except for Microsoft Corp. MSFT-Q and Meta Platforms Inc. META-Q, aren’t recognizable to the average investor. In our view, you can’t outperform in investing by doing the same thing as everyone else. Many investors are pigeonholed by geography, market cap or sector constraints. We go where others won’t or can’t. For example, we own a fast-food chain in Singapore, Snack Empire Holdings Ltd., and fintech company Kaspi.kz in Khazakstan.
What have you been buying or adding in recent months?
One company we’ve been adding to is Kakaku.com Inc., which has Japan’s largest price-comparison website [the namesake kakaku.com] as well as Yelp-equivalent Tablelog, in which people can search for restaurants and write reviews. It’s also building out a jobs classifieds site. It’s one of the rare companies on the planet with a targeted return on equity of 40 per cent, which is quite strong. We bought the shares when they dropped in March, 2020, and added to it when they fell again earlier this year.
The other company we’ve been adding to is Canada’s Constellation Software Inc. CSU-T, which has been our top position since we started managing money in 2014. Constellation currently represents about 9 per cent of our balanced portfolio. We’ve been selling shares of some of the software giant’s spinout companies – more recently Topicus.com Inc. TOI-X and Lumine Group Inc. LMN-X – that we’ve been given as shareholders and investing it back in Constellation Software. One reason is we want to keep our portfolios relatively simple.
What have you been selling or trimming in recent months?
One stock we sold recently was Check Point Software Technologies Ltd. CHKP-Q, an Israeli company listed in the U.S. Check Point is the inventor of the modern firewall. It ticked a lot of the boxes we look for in a business except its market position. It’s losing market share to competitors, so we decided to sell it in March after owning it for a couple of years.
We also sold A2 Milk Company Ltd. in March. The company produces milk that’s easier for lactose-intolerant people to consume. We bought A2 a couple of years ago because it put up strong returns on invested capital and sold a premium product with gaining market share. More recently, we became concerned about its growth prospects. The company is very reliant on China for its infant-formula business, and birth rates in the country are dropping like a rock. It’s a good company, but, in our view, not good enough as we become pickier about what goes into our portfolio.
Name one stock you wish you bought or didn’t sell, and why?
In retrospect, we regret selling Denmark-based multinational pharmaceutical company Novo Nordisk A/S ADR NVO-N in the mid-$US90 range about a year and a half ago. It’s now trading about double that. It’s a leader in diabetic treatment and now also obesity medication Ozempic, which has been in the news lately. We sold it because we don’t have the medical background or training to assess its prospects or the competitive landscape accurately. We don’t lose much sleep over that, as we accept there will be companies we miss. When we bought the company about four years ago, I was more focused on just the financials and returns of a business and less on the competitive advantage and long-term prospects. Our framework continues to evolve and improve.
What’s your advice for new investors?
I always tell people to spend less than what they earn. Also, I’m a big advocate of investing with a plan either on your own or with an adviser and revisiting it once or twice a year. Also, match your investments with your time horizon. The money you need in five or more years should be in stocks, while anything you need before then should be in cash or cash-like investments. If you want to learn more about investing, I recommend reading everything by Warren Buffet and Charlie Munger. They are the GOATs [greatest of all time].
This interview has been edited and condensed.
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