Michael Glennon, who worked with Peter Mouatt at small-caps boutique Adam Smith Asset Management, has launched a new venture after splitting from the business.
Glennon left Adam Smith AM in August 2008 because of what he described as “different levels of enthusiasm in the business” between himself and Mouatt as they approached different career stages.
“I’m 35, he’s 53,” Glennon said. “I can see myself working here for another 10 to 15 years.”
He soon sold his equal shareholding in the business to Mouatt, and began running a small-caps portfolio two months later. Now, with a one-year track record and the expiry of a ‘no competition’ agreement with Adam Smith AM, he is taking his new business, Glennon Capital, to the institutional market.
He has researched and managed small-caps for 12 years – at Paradice Investment Management, Republic Funds Management (which was bought and later sold by Soul Pattison) and Adam Smith AM – and after this string of jobs, signing the no competition contract “was great because it gives you a clean sheet of paper”.
“My general view of everywhere I’ve worked, and what I know of how other people operate, is that there’s not a lot of process in small-caps. There is no structure [in place] for the information that you want to get out of the meetings [with companies],” Glennon said.
The no competition agreement forced Glennon to look critically at the investment process he was designing for the new business and determine whether it rehashed techniques used at his former employers or one that he believed would truly find superior investment opportunities.
This approach contrasted from the process used at the boutique he previosuly worked at.
“At Adam Smith, we borrowed stuff that Peter did at Macquarie, what I did at Paradice, and a bit from ING.”
He showed the new ideas to Jonathan Ramsay, a former asset consultant with Aon who was then running Perspicuous, a business advising fund managers about their strategies, who was unimpressed but said it could be improved by seeking company information that was ”not insider, not private,” but lesser known and appreciated.
Glennon aims to find this information by relying not on brokers, but on regular dialogue with the executives of small-cap companies. He runs a database with the meeting notes and contact details of about 800 small-cap company executives, including managing directors and chief financial officers, which have been collected over the years, and regularly makes and fields calls to and from them in order to find new information.