View the article online at http://citywire.co.uk/wealth-manager/article/a758959
Artemis' Niznik: I believe the struggle is now behind us
by Dylan Lobo on Jun 26, 2014 at 12:53
The timing of Mark Niznik’s move to Artemis in 2007 was unfortunate.
The small cap manager had brought a stellar track record with him from a 10-year period split between Invesco Perpetual and Standard Life Investments.
As Niznik set about stamping his authority, the Lehmans disaster struck, and a quartet of holdings in unquoted energy companies – Vostok, Hurricane Energy, Central Asia and Ophir - became a problem. At their peak exposure, these stocks accounted for 18% of the fund and according to Niznik they wiped around 30% from performance.
‘The fund was doing really well under John Dodd and was the best performer in its sector over 10 years,’ Niznik told Citywire Scotland. ‘We didn’t see the credit crunch coming and during the transition to my way we got hammered.’
Thanks to the recent rally in small caps, investors who stuck with the fund have seen returns of 148.9% over the last five years, although this is below the peer group average of 166.5%. Niznik, who was rated by Citywire for 25 consecutive months from June 2005, has not regained his rating since losing it in August 2012.
He does not regret taking the challenge and with only a small holding in Hurricane remaining of the four he is far more comfortable with the portfolio’s construction. ‘Artemis is the best place I have worked at and I wouldn’t swap it for any other job. John [Dodd] has been brilliant and I believe the struggle is now behind us.’
As someone who likes to keep risk low, Niznik was also hit by the rally in small caps. ‘When markets are zooming, it doesn’t fit my style. I’m one of the most cautious managers in my sector and am likely to struggle when markets are rampant,’ he said.
Niznik believes what distinguishes him from his peers is his extensive qualitative research in the hunt for firms with strong franchises and free cash flow yields.
‘I’ve been doing this job for 30 years and believe my edge is being able to interlace my connections to find the best opportunities,’ he said. ‘I’m not necessarily super-bright, just super-diligent.’ By way of demonstration, Niznik opened an iPad holding notes on some 4,500 meetings he has conducted while at Artemis.
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