Billionaire investor Alex Waislitz says “selfish behaviour” and “crazy indulgence” has put his home town in lockdown, but has warned Melbourne needs to open up to prevent a deepening of the long-term damage being done to the national economy.
Mr Waislitz is navigating what he says is the most challenging, difficult and unpredictable period in his 30-year investment career and has defended the performance of his listed investment vehicles Thorney Opportunities and Thorney Technologies, which are trading well below net tangible asset backing.
Speaking after an update to investors from his home in Toorak, Mr Waislitz said the state and federal governments had a difficult job to do but they had to find a way to keep the economy moving and encourage new industries to grow.
“We can’t bring the economy to a complete standstill. It’s a trade-off. We have to have some vibrancy back in to the economy. We have to ensure that jobs are around and businesses still thrive and that is particularly relevant for the smaller and family-run businesses which are still the lifeblood of this nation,” Mr Waislitz said.
“It is a difficult situation [for governments]. But we have to keep the economy going and encourage new industries or industries of the past to come back, such as manufacturing.
“The longer we delay that, the more economic pain we will suffer and that’s no good for anyone, but obviously that has to be done under the context of what is safe and healthy.”
He is particularly worried about the impact on people’s mental health. “What are the short- and long-term consequences of that? We don’t even know yet. That’s really troubling and a little bit scary. We have to all find a way to be compassionate and understanding and helpful. That’s the bigger issue almost than anything else.”
Mr Waislitz took to Zoom on Wednesday to provide an investor update and hold discussions with executives behind companies in which he is investing: pharmaceuticals company Palla Pharma, sleep apnoea device maker Oventus Medical and debt repayments group Credit Clear.
It is part of a strategy to better communicate what Thorney is investing in and why. Despite a boom for technology stocks, Thorney Technologies is trading at 25¢ compared to a net tangible asset backing of 33.8¢ at June 30.
Thorney Opportunities, a long-term value investment group backing corporate turnarounds, is trading at 46.5¢ compared to an NTA of 61.4¢ at June 30.
Mr Waislitz said the disconnect was disappointing but defended the listed investment company model.
“There’s a lot of underperformance and question marks over if this is a right structure or not … I like the structure, I still think it’s legitimate,” he said.
Mr Waislitz spent $240,000 last month buying another 100,000 shares in Thorney Technologies.
He said the group needed to do a better job informing investors about its investments, which include a number of unlisted entities in Israel, the US and Australia.
I can argue strongly for the market to be euphoric and bullish … But on the other hand I can argue very negatively.
Another is Perth company GLX Digital, which has developed software as a service for online commodity trading and recently snared investment from Royal Dutch Shell.
“We think we’ve done a pretty good job at building what I hope will be the cream on the top of the cake as they develop and mature over the next few years. Not all of them will go to IPO. Many will , some will stay private and others will be taken over.”
Mr Waislitz said if the market didn’t see value in some of its investments, other companies would, pointing to the takeover offer for OneVue by Iress.
“We are buying more shares so you can probably get a sense of what we feel about it. It makes sense for Iress to buy the company but that doesn’t mean that they should get it at an opportunistic level.”
Mr Waislitz shares concerns held by fellow Financial Review Rich Lister Hamish Douglass that there are two versions of the future for financial markets and it is unclear which one to back.
‘You want to see both sides’
“I regard myself as a pretty good debater and can argue strongly on a thematic and I can argue strongly on a buy side of a company and a sell side of a company. It is important to be able to do that. You want to see both sides of the story and you weigh up which ones you are convinced about,” Mr Waislitz said.
“I agree with Hamish [Douglass] completely. I can argue strongly for the market to be euphoric and bullish … But on the other hand I can argue very negatively.”
He said low interest rates, improving prospects for a coronavirus vaccine and stimulus spending propping up consumers and generating infrastructure investment provided a positive outlook, especially with a US election on the horizon that meant turning the stimulus tap off was unlikely.
But equally he felt there were plenty of reasons to be negative. There was the unknown impact to mental health and massive economic and business disruption, with many businesses unable to sustain the downturn, collapsing and pushing up unemployment.
And he said there had been massive gains in some stocks. “You can question the valuations,” he said.
One stock in particular, Afterpay, has surged 660 per cent since March 23.
“We like that [buy now, pay later] space, subject to where we think valuations will be sensible in the context of how much blue sky is attributed to their phenomenal growth,” Mr Waislitz said.
So, is there still blue sky for Afterpay?
“We are a great believer in them. We have sold a considerable amount of shares and bought a considerable amount of shares. The valuation is getting higher but the story is getting better. The repeat business of customers and a lot of the key metrics are growing as well,” Mr Waislitz said.
Fellow buy, now pay later provider Zip is one of Thorney Technologies’ biggest holdings.
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Julie-anne Sprague co-edits our Rich Lists and covers entrepreneurs, wealth creation and investments. A senior journalist in our newsroom, Julie-anne has covered politics, property, agribusiness, retail and stockmarkets in both the UK and Australia. Connect with Julie-anne on Twitter. Email Julie-anne at email@example.com