67 WALL STREET, New York - November 25, 2012 - The Wall Street Transcript has just published its Oil and Gas Investing Forecast Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Oil & Gas Investing
Companies include: China Petroleum & Chemical Cor (SNP), PetroChina Co. Ltd. (PTR), CNOOC Ltd. (CEO), Valero Energy Corp. (VLO), Exxon Mobil Corp. (XOM), Chevron Corp. (CVX), BP plc (BP), Enersis S.A. (ENI), Total SA (TOT), Helix Energy Solutions Group, (HLX), Peabody Energy Corp. (BTU), Cameco Corp. (CCJ) and many others.
In the following excerpt from the Oil and Gas Investing Forecast Report, an experienced portfolio manager discusses the outlook for the sector for investors:
TWST: Please give us some history of Guinness Asset Management, and tell us about your background as well.
Mr Guinness: I started my career in the 1970s working at Barings Investment Bank in London. My job was advising companies on raising capital and on mergers and acquisitions. After eight years, I moved on to a smaller investment bank, and four years later, this company asked me if I would take over the investment side of its business. I was not looking for a change of career but the opportunity was intriguing, and I was happy to do that.
It was 1981, and the world was changing. The U.S. had come off the gold standard in 1970, and certainly, the 1970s had been a pretty terrible decade for investors and stock and bond markets. Inflation had really got out of hand. But that didn't put me off getting involved with the stock market. In fact, what I thought to myself was maybe, as the market was now so cheap, the time was getting close when it would start to recover. London had had exchange controls until about two years before that, and when they removed those controls, suddenly it was easy to invest all around the world. I decided that my approach to building this investment department would be to focus it on international investing, and that has been the theme of my career for the last 33 years.
I also had a soulmate in Howard Flight, an old Cambridge friend, who was already in the business and worked with me on building it up.
Over the next 18 years, we built a successful business latterly known as Guinness Flight Global Asset Management, acquired some equity in it, and in 1998 we were acquired by a successful South African bank called Investec. The business had grown from $100 million under management to about $12 billion, and had gone from 20 people to about 350.
After the takeover, there was a suggestion we should close down the energy sector fund that we had run for 13 years but that had attracted little investor interest. I said to anybody who would listen that it was a crazy choice. I pointed out that the oil price was very, very low at that moment - it was 1998 - and it wasn't very smart to close the fund at the very bottom of the commodity cycle. My colleagues said the problem was that there was no one to run the fund, and when I said I would run it, they said I could not as I was the Chairman. I then said that since I was the Chairman, it was my job to decide these things, and I would do it.
That small acorn led to four years later to my retiring from Investec and the setting up of Guinness Asset Management in London and Guinness Atkinson Asset Management in Los Angeles. This I did in order to achieve two things. One was to allow me to continue to run this energy fund, and the second was to enable me to acquire a U.S. mutual fund business, which I had set up in 1994, and which Investec had decided to exit. Together, these two companies focused on international investment management.
I really found energy an interesting investment area. It played to my strengths. I was a global equity investor and energy investing is global. Meanwhile, Guinness Atkinson focused on managing Asian equity funds for U.S. investors, an enthusiasm of mine from the early 1990s. Then shortly after we set these companies up in 2003, the world stock market crisis of 2000 to 2002 ended.
The U.S. mutual fund business, which as I mentioned focused on investing in Asia, began to pick up nicely. And then, in 2004, the oil price started moving up. When I took over the fund back in 1998, it had $3 million in it. In 2004, we launched a Guinness Atkinson Global Energy Fund. And by 2006, we had built our combined energy assets up to $2 billion. I then began to recruit people to help me develop the business.
Then came another twist in the tale. Investec had built up their own research team and asked for their non-U.S. fund back. We then had to launch my own non-U.S. energy fund in the teeth of the 2008 gale. But we managed, and currently, we have about $400 million in energy although we haven't quite got back to the $2 billion of 2006. I have about 20 people working between London and Los Angeles, including Will Riley and Dr. Ian Mortimer, who work with me on the energy fund. We are looking forward to the next 10 years very much.
TWST: What are the main funds you manage now?
For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.