You could easily overlook Yoshino, a tiny sushi restaurant nestled in a back street of London’s Piccadilly, writes Anna Dumas. Luckily, I had the inside track from a regular patron: John Macmahon, founding partner of Gore Browne investment management.
The restaurant’s neon sign (which simply says ‘sushi’) might appear to some as slightly incongruous with the austere Britishness of its surroundings. But our conversation explained Macmahon’s affinity for it – not many of the wealth managers I’ve met speak fluent Japanese.
Over plates of sushi from the ‘hana’ menu, we discussed his career. This spanned working at ANZ’s securities and investment banking division in Tokyo to founding a private client investment management firm in Salisbury.
Macmahon explained how everything he learnt from the former is backing up his proposition at the latter. ‘Business in Japan is extremely structured and formal,’ he told me.
‘You need an understanding of
the corporate culture in order to do well there.’
The importance of having this understanding (and the nature of this formality) was characterised by his experiences working with equity warrant issuers and their securities company sponsors in the 1980s.
‘You had to be extremely solicitous and host dinners for the syndicate desks of the securities firms to find out where the new issues were going to come from.
‘It was all a game. There was quite a lot of drink involved and then, some time after midnight, they’d reel off names of forthcoming issuers. You had to remember them as writing anything down was frowned upon, it was like the Generation Game!’ he said, laughing, as I opened a bottle of Asahi beer.
‘The next stage then was visiting those companies, which tended to be all over Japan and often quite small, so they rarely spoke English, That’s where my Japanese became pretty useful.’
And it’s serving him just as well now, as an asset allocator. Tucking in to a triple-layered platter of gleamingly fresh sushi, Macmahon recalled how deciding to allocate to Japan last March gave his clients ‘reasonable gains’, which he expects to maintain;
‘Any market that goes up 50% in 12 months is going to see some retrenchment, but there are still a lot of good things happening at a company level thanks to a systemic shift towards better corporate governance; that’s your biggest driver of return on equity.’
He added that the new wave of inflation is introducing another potential upside to the case for Far Eastern investment.
‘Most companies operating in Japan have known a deflationary environment for the last 20 years or so, so they hold huge amounts of cash on their balance sheets. Now that that’s becoming an expensive practice, they’re having to think about ways to deploy that capital, and since they’re not hugely capex-friendly we are hopeful that will go towards share buybacks and increased dividends.’
Tucking in to a Japanese export I had been particularly anxious to try – wagyu beef – we brought the conversation closer to home, discussing how Macmahon’s understanding of a niche sector fits into Gore Browne’s open architecture investment process.
‘Thanks to both our size and our knowledge of global markets, we can be that much more nimble when it comes to finding the right investment solutions,’ he told me.
‘Everyone who manages money at the firm is on the investment committee, everyone has a voice. It’s much easier when you’re small to operate on an inclusive basis.’
As our meal drew to a close, he mentioned the two new ‘voices’ that have recently joined the team as graduates.
‘It’s one of the best things we’ve ever done. They’re bright, they’re enthusiastic, they’re fun and their presence keeps us directors on our toes,’ he told me.
‘It’s always good to have young blood around.’