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GregHoffman
Level2,282OxfordStreet(02)83056000BondiJunctionNSW20221800620414
SUMMARY
GregistheResearchDirectorofTheIntelligentInvestorPublishingPtyLtd(AFSL282288).HeisalsoaResponsibleManagerforthecompany’sAustralianFinancialServicesLicenceandsitsonthecompliancecommittee.GreghasmanagedTheIntelligentInvestor’sanalyticalteamsince2001,directingthefirm’seditorialcontent.Hehasbeeninstrumentalindevelopingthecompany’sbusinessplansandtransitioningthebusinessmodelfromatraditionalprintpublishertoasuccessfulonlineservice.Aswellassupervisingtheoutputofateamofanalysts,GreghasanalysedawiderangeofstocksforTheIntelligentinvestoracrossanumberofindustries.PriortojoiningTheIntelligentInvestorin2001,Greghadarangeofexperienceinanumberoffirmsinthefinancialsector,withastrongbackgroundinmoneymarketandfixedinterestoperations.
EXPERIENCERELEVANTTOTHEROLEASRHGDIRECTORFinancialanalysisskillsandexperience
Greghasbeenanactiveinvestorformorethanadecade,analysinghundredsoflistedandunlistedsecuritiesandproducts.HehasastrongknowledgeoftheAustralianfinancialsectorandaworkingknowledgeofimportantoperationalissuesrelevanttoRHG,includingthesettlementofresidentialmortgagebackedsecurities(RMBS)gainedthroughhisexperienceatMacquarieBankandalsoNatWestmarketsinvolvingtransactionsundertakenbyitsPrimeAssetVehicle(PAV)structure.GregwasinstrumentalinthefinancingandplanningassociatedwiththemanagementbuyoutofTheIntelligentInvestorin2004.
Marketanalysis
‘Moneyhasbeentoocheapfortoolongandtheworldisaddictedtodebt.Australia’saddictionisuptherewiththebestofthem.’–GregHoffman,January2007.Greghasbeenakeenobserverandanalystoffinancialmarketsandmacroeconomictrendsformorethanadecade.AsanexampleoftheprescientinsightsGregcouldoffertotheboard,enclosedisacopyofanarticlehewroteinJanuary2007,titled
DearGlenn,youhaveaproblem
(fromwhichthequoteaboveistaken)
.
Thetheme,thattheworldwasoverleveraged,wasonehewroteaboutconsistentlyintheyearsleadinguptotherecentfinancialcrisis.TheseinsightscouldbeofimmensevaluetotheRHGboard.
Mediacommunication
Since2001,Greghasbeenakeyrepresentativeof
TheIntelligentInvestor
inthepublicsphere.Heisaregularcolumnistfor
Money
magazineandtheASX’smonthlynewsletter.Hewasalsoaregularcolumnistfor
ProfessionalPlanner
magazine.Gregisarecognisedopinionleaderonfinancialmatters,beingquotedinahostofnationalandinternationalpublicationsincluding
TheEconomist
,
TheAustralian
(particularlyinrelationto
TheIntelligentInvestor
’swarningsabouttherisksinCentroPropertiesGroupbeforeitsprecipitousfall),
TheSydneyMorningHerald
,
TheAge
,
TheCourier‐Mail
and
TheAdelaideAdvertiser
amongmanyothers.HemakesregulartelevisionappearancesonABCLatelineBusinessandhasbeensoughtoutbySkyNews,TenNewsandSkyBusinessViewtonameafew.Onradio,hehasbeeninterviewedseveraltimesforRadioNational’sBackgroundBriefingprogram,aswellasABCRadio’sPMprogramandTripleJ’sHackprogram.ThisexperiencewouldbevaluableinassistingtheRHGboardindevelopinganappropriatemediastrategy.GregwouldalsomakehimselfavailabletoRHG’smanagementteamtoadviseonmediamatters,includingtheincreasinglyimportantissueofonlinecommunicationsstrategyandmanagement.
Shareholdercommunication
TheIntelligentInvestorhasareputationforpresentingfinancialinformationinalanguagethatenablesitsmemberstogenuinelyunderstandtheirinvestments.Itisalsoattheforefrontofnewweb‐enabledcommunicationmediums,suchaspodcasts,vodcasts,onlineforumsandwebinars.Gregwouldbringhisexperienceinthisarea,inadditiontoextensiveexperienceprovidingface‐to‐facepresentations,totheRHGboard.ThiswouldenabletheboardtoclearlycommunicateitsintentionsandstrategytothewidershareholderbaseandenablethoseshareholderstounderstandwhataninvestmentinRHGentails.
ACADEMICQUALIFICATIONS
BachelorofBusiness(AccountingandFinance),UniversityofTechnology,Sydney.
EMPLOYMENTSUMMARY2001–current
TheIntelligentInvestor
ResearchDirector
1999–2001
MacquarieBankMoneymarketandfixedinterestoperations
1998–1999
RoyalBankofCanadaFixedinterestoperations
1997–1998
NatWestMarketsMoneymarketoperations
1996–1997
PermanentTrusteeMoneymarketoperations
Issue 215, - 17 Jan 07
Feature Article
Dear Glenn, you have a problem
Date: 17 Jan 07
One of the world’s most renowned value investors has published a book, and it’s got us worrying.
Chris Browne is a man worth listening to. He’s a principal at one of the most successful investing companies ever,Tweedy, Browne Company LLC (it was one of the ‘Superinvestors of Graham-and-Doddsville’ highlighted byWarren Buffett in his famous speech of that name). So when I noticed Browne’s
The Little Book of ValueInvesting
in our local book store, it went straight to the top of my Christmas reading list.The book packs a lot of punch and is well worth a read—the most interesting part is his 16-point checklist, whichwe’ve reproduced on the following page—but for me, it reignited my thinking about a couple of issues that havebeen top of my worry list for a long time.
The debt binge
The first, and the biggest, can be summarised in one word: debt. A major problem with high debt levels, Browneexplains, ‘is that companies or individuals cede a measure of control over their affairs to a lender … Whether it isa company running up debt to pay for expenses, or a person borrowing to buy stocks on margin, the borrower isgiving someone else the right to say when the game is over.’ This is nothing new, but it did start me thinking again. Money has been too cheap for too long and the world isaddicted to debt. Australia’s addiction is up there with the best of them.Private equity booms, hedge fund mania, property booms, record consumer debt, negative savings rates, massivecurrent account deficits, commodity speculation—it’s all a result of money being too cheap. We have theextraordinary situation of investors being able to borrow 100% of the funds needed to invest in a 90%-leveragedhedge fund which then goes out and buys junk bonds.Central banks around the world have finally woken up to this and have been ramping up interest rates over thepast couple of years. In Australia, at least, it doesn’t seem to be making any difference.The Reserve Bank of Australia has raised rates five times since November 2003, taking the official rate up from4.75% to 6.25%. But the medicine is not working; Australians continue to borrow, and borrow, and borrow.The RBA’s latest numbers, for October 2006, showed credit growth for housing up 14%, personal credit up 11%and business lending up 17%. To fund all this borrowing, the RBA needs to print more money, and more moneywill eventually lead to higher inflation.
Debt junkies
So why aren’t the interest rate rises working? Surely if the price of money goes up, demand goes down, right?That should be the way it works, but what if you’re so addicted you don’t care about price—all you’re worriedabout is your next fix? What if the only way you can meet your loan repayments is to borrow more? It’s certainlyeasier for the bank manager to give you another fix—he’ll probably have moved on by the time you check intorehab.In the late 1980s, interest rates were already north of 13% but credit demand was still growing at almost 20% ayear. It’s easy to look back and think 18% interest rates were too extreme. But it wasn’t until the economy washit with a sledgehammer that people stopped borrowing.We’ve no idea how high interest rates need to go this time around, but 0.25% rises don’t seem to be making anydifference. New Reserve Bank Governor Glenn Stevens has a big problem on his hands and how he resolves it willhave serious consequences for the sharemarket.
The China syndrome
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