Originally Posted by
the homzen
I think there are some good points on both sides of this debate. But I've done my research and here are my final thoughts on the matter:
1. Pie Funds Board - there have been a number of changes to the board in the past 2 years, especially for such a small company. The current board is Mike Taylor, Richard Avery-Wright, Steve Nichols and Roy Knill. Richard Avery-Wright is also the sole shareholder in Castle Point (a new NZ/Aust fund manager) so is in almost direct competition with Pie Funds. Steve Nichols used to work with Mike Henry, who was also on the Pie board. Mike Henry is Mike Taylor's father in law. Roy Knill is an Auckland doctor (GP) with no fund management experience. He owns 5% of Pie's equity and is also on the investment committee. My concern: who on that board is going to stand up to Mike Taylor as a truly independent director?
2. Investment Committee - includes Mike Taylor, Mark Devcich, Chris Bainbridge and Roy Knill. Mark and Chris work at Pie Funds, have been trained by Mike Taylor and have never worked anywhere else in fund management, and Roy is a GP as outlined above. There is not a single independent voice on this committee. Again, who's going to stand up and ask the hard questions on stocks like TTN?
3. Capacity - if a fund is closed, it should be closed. In this type of concentrated small cap strategy, fund size is the enemy. Letting in more money is detrimental to existing investors. If the Pie Funds directors/staff want to invest more, they should take capacity as investors withdraw, not keep adding more on top of that.
4. Transparency - or lack of it. Sure, some stocks get written up in the newsletters, and some mistakes get discussed. But what about stocks like TIL (Ecoya), ECV, PSZ and CGO, on all of which Pie has filed substantial notices? Note that in the sector breakdown in the newsletters, TTN was classed under 'Energy'. It's not an Energy stock.
5. Changes to performance reporting/being selective with dates - when a fund manager changes the way it reports performance with no explanation, it throws up a few questions. As does changing the dates on charts to make the story look better.
6. Focus - not only is the CEO running Pie Funds (now with 5 funds and $190m FUM) and managing 8 employees, he's also running (and writing) a financial/lifestyle magazine and flying round the world doing manager research. Compare this to 2.5 years ago when it was 2 funds, $30m FUM and 3 employees.
The track record is beyond reproach, but it is past performance. The big question is where it goes from here.