Mixing Management Styles Is a Simple Thing for Beaumont
While other managers agonise over the issue, Michael Dobson, founder of newly created Beaumont Capital, says mixing the management of long/short with long-only portfolios is simplicity itself.
He says: "You've got to be set up to do both on an absolute return basis. We manage global and European equities in this way.
"I'd agree that firms mixing long/short with index-benchmarked institutional funds face more of a challenge. But we are seeking to cater for the wealth market, so that's not a problem for us."
Dobson should know what he is talking about, as former chairman of Deutsche Asset Management and its voice on the Deutsche Bank Vorstand.
He became renowned as helping to push Morgan Grenfell forward, under the lead of Sir John Craven, prior to its purchase by Deutsche.
He recalls in vivid detail the day they decided to close Morgan Grenfell Securities: "A painful decision, but sensible, given its lack of market share," he says.
Over the years, Dobson became used to dealing with big company politics: "It's not always straightforward," he says.
Tempers really frayed at Deutsche when its Vorstand decided the firm should merge with Dresdner, and sell its German asset management arm DWS, to Allianz, Dresdner's main backer, to facilitate the deal.
Dobson felt obliged to resign on principle, because he felt that DWS was both a jewel in his crown, and its principal profits motor.
The fact that the Deutsche/Dresdner deal went on to founder as a result of issues such as this justified his stance.
He continues to serve as an adviser to Deutsche, while spending most of his time pushing Beaumont forward, in partnership with his chief investment officer Raphael Kanza.
Dobson also serves as non-executive director at Schroders. He produces the line that it retains enough clout and skill to rebound from dark days in recent years.
Dobson could play an important role on the jury which may, one day, decide whether Schroders deserves to maintain its independence.
The betting in the market is that Schroders will end up being bought, even though performance is turning the corner. But this is a deep issue on which Dobson declines to speculate.
Beaumont's story has evolved from the 1970s, when Dobson was head of Morgan Grenfell Investment Management.
In those days, Kanza played a big role in developing research and fund management at French stockbroker Cheuvreux de Virieu.
Cheuvreux was unusual in being willing to develop ideas on French equities and share them with Anglo-American fund managers.
"Before we developed our service, equity research served French banks concerned with credit worthiness, rather than investment managers seeking equity returns," says Kanza.
"I've never forgotten the way Raphael contributed to my performance," adds Dobson.
Like Dobson, Kanza went on to get caught up with the affairs of an ever growing company.
Subsequent to Cheuvreux's affiliation with Banque Indosuez, he became its chief executive and, ultimately, head of European equities for Indosuez.
"I had to cut myself off from many relationships, in order to fulfil the chief executive role," says Kanza.
He did, however, continue to remain involved with core clients who valued his direct advice.
One such client was Pfizer. Kanza managed funds for the company between 1971 and 1988, generating an annualised return of 18.3%, against 8.8% from French equity indices.
French Focus funds managed by Kanza for select clients over the eight years to 1998 did even better, by generating an annualised 26.5% against 9% from the CAC 40 index.
Kanza's performance was strong over nearly every quarterly period. It is remarkable that he proved able to produce this while getting involved in big company politics at Indosuez.
Once European broking operations at Indosuez had become well established, Kanza decided the time had come to build his own business in July 1998. …