In 1990 Don Williams’ father died. Williams, then a soft-commodities analyst at AMP, was suddenly thrust into the role of asset manager for his recently widowed mother who inherited 5000 acres of property, the majority of which was planted with cotton.
The Wee Waa native sold land and machinery to pay off debt, leased other land and used the proceeds of what was left over to invest in the Australian stock market.
Williams used a broker at Wilson HTM Group whom he credits with giving the then-25-year old “a lot of assistance and education” in the Australian share market.
The investments did well to the extent that in some years the Williams family portfolio was up 30 per cent. An idea began to form in Williams’ mind: why not run money himself?
In 1998 that chance came when the Sydney proprietary trading desk of Credit Suisse First Boston, where Williams was an analyst and trader, dissolved after its chief Nicholas Wright quit.
Wright, whose wife is Williams’ sister-in-law, had made a small fortune by the time he left CSFB at 38 years of age.
Platypus on Macquarie St
Wright set up offices on Macquarie Street, acted as a venture capitalist, bought paintings he liked and gave Williams a desk to continue to manage money.
Williams raised $30 million in his first year from family, friends and acquaintances and another $20 million in his second year of business as an asset manager.
“We struggled to grow from there,” he recalls.
“We didn’t understand the industry. We had no track record. No one knew us. We thought if our returns were good we could raise money. But a lot of groups were paranoid we’d steal their best clients. We had no retail product.”
Seven years after opening for business in January 1999, Australian Unity spied something in Williams that others had not. They decided to invest in Platypus, taking a 50-per-cent stake – Williams and Wright are the other shareholders – and brought institutional investors into the fund.
Now Platypus manages $1.05 billion. Its annual gross return has been 13.3 percent since January 1999, compared with the 8-per-cent annual gain in the S&P/ASX 300 Index over the same period.
“Our style is very consistent. It’s a growth-oriented style of investing,” says Williams. “We invest in companies that will grow their footprint over time, typically they have a sustainable competitive advantage.”
Things happen in threes
Platypus’s team of three analysts and three portfolio managers typically hold a stock for three years, sometimes buying shares after they have touched historical share-price lows and are showing signs of recovery.
As Platypus often invests in companies outside the S&P/ASX 100 Index, its analysts and portfolio managers each make as many as 40 company visits annually, trying to assess if the chief executive has a strategy and the ability to execute it.