Hiten Patel: Thank you for joining the show today. I'm delighted to welcome Victoria Stevens from Liontrust Asset Management. Welcome to the show.
Victoria Stevens: Thanks so much Hiten.
Hiten: Do you want to start, Victoria, by giving a brief introduction to your current role and company?
Victoria: Absolutely. Liontrust is a listed asset management business. It was launched in 1995. It's been listed on the London Stock Exchange since the late 90s, and our core principle as a company is the application of consistent and differentiated investment processes to the management of active funds. There's no house view, so each team, each investment team is given the freedom of their own investment processes. They can implement them as they wish. There's no CIO [Chief Investment Officer] sitting over the top, and the idea is that the business is all set up to give them the freedom to do that without the distractions of the day-to-day running of an asset management business.
In terms of my team, we are one of seven investment teams at the firm. My team is the longest standing of those teams. Anthony Cross, who was the first into the team, is the head of our team at the moment. He first joined the company back in 1997, went away to research what still forms the origins of our investment process today, and launched the first fund under our banner in 1998.
That makes us pretty unique as a team, because we've been managing the same fund under the same manager for nigh on 27.5 years now. That is a pretty unique selling point in the market. Now, I joined there 10 years ago and have been there ever since. I can give you a quick process explainer if that helps in just a minute or two.
The way that we invest money on behalf of our clients is that we have a suite of UK Equity funds and a much smaller Global Equity Fund, which I'm not involved with. I work on the four UK focused unit trusts. The investment process is all about searching for intangible asset strengths within businesses or intellectual capital that we think is going to give these businesses enduring competitive advantage.
If we get that right on the way in, if we get into these fantastic businesses with these great competitive moats, then the power of compounding over a long period of time should serve us in good stead in order to generate really good long-term returns for our clients. We ally that with almost an objective test of their ability to do to companies by looking at return on invested capital as our yardstick for measuring whether or not the companies are actually able to put that competitive advantage into practice.
We have a strong tilt towards small and mid-cap companies across our range of funds, but we do invest across the whole of the market cap scale. From the biggest businesses in the FTSE 100, we own Astrazeneca, for example, right the way down to microcaps in our UK microcap fund.
Hiten: Awesome. Look forward to getting stuck into that later on in the conversation. Before then, I’d love to rewind the tape a little bit and understand how you got into the role that you're in today, the start of your career journey and some of the roles that you'd done before that led up to this.
Victoria: Sure. I did Modern Languages at University -French and German at Oxford, - which is a slightly unusual route into the industry, had to be said. My first job out of university was actually on the periphery of the financial services industry, in that I was in financial journalism. I worked for the Freebie Paper, City A.M. as a diary editor and reporter for three years. And why did I do that? I kind of always knew that I enjoyed writing, and I was good at writing, and I was always enticed by the cut and thrust of the City., but was almost railing against the traditional path into the industry where people signed up for graduate schemes and went on that kind of treadmill.
So, I went there, and it was a fantastic experience. It was certainly a baptism of fire. As a small business, you do everything, you're a jack of all trades. The diary editor’s stint was certainly fun. It was a lot of late-night parties and then writing up the gossip from that afterwards. But I quickly realized that print media was not an industry in which I wanted to be long term. It's clearly in a state of structural decline that the media industry has already largely shifted digital even since then.
And so, I took an opportunity that was given to me when I interviewed the female CEO of a corporate broking business. She had spun it out of JM Finn, the stockbroker, a number of years previously. I met her for lunch and interviewed her, and she offered me a job, and I was delighted to accept that. I went to work in corporate broking, and I stayed there for five years. My current head of the team, Anthony Cross, was my first client that I got when I joined, and I remember him saying to me very vividly that he invests in a very particular way, looks for very specific things in the companies that he invests in.
And if I were to listen to that and to really think carefully and not darken his door with things that didn't fit the investment process, then he and I would get on very well indeed. And indeed, that is what happened, because five years later, having kept in close contact the whole way, obviously as a client, he then offered me the chance to join his team at Liontrust and move on to the buy side, and I've been at Liontrust ever since.
Hiten: What a nice sequence. For everyone listening, I think there's something in there that you can't always predict where you're going, but seize the opportunities as they're presented to you, as you outline. Any learnings from the earlier roles that are equipping you well today in doing what you're doing?
Victoria: Definitely. I think that every opportunity you get corporately, and indeed, previously, I remember when I was doing my modern languages degree, I had to go abroad for a year. I worked in a Parisian school in one of those infamous Parisian suburbs, right at the point where they were experiencing quite severe rioting. I remember walking in as a 20-year-old to a class full of French 15-year-olds, who did not want to be in that class. I'm only 5'1, you can’t see that, I am sitting down now, but a lot of them were clearly at the age of 15 about 6′.
I remember walking into a classroom full of 30 of those, and thinking, “I will never do anything as terrifying as this in my whole life.” So, in a sense, every role that you have, every new challenge provides you with the opportunity to learn that if you lean in and embrace a challenge, then that way lies over the long term success in the business world, and it's something which I think you can carry through.
Certainly, it was something where walking into big awards, ceremonies, or parties, as the diary editor at the paper, knowing nobody and being tasked with speaking to people, introducing myself, starting that from scratch. It certainly means that, however challenging the company meeting or the investor meeting that I go into these days, I always know that it could be worse.
Hiten: It's a beautiful story. Let's get stuck into the meat of it. You obviously have a front row seat in deploying capital into companies. There is a lot of chatter right now, particularly in areas like the mid cap sector, particularly around UK listed companies. Talk to me about the role and the importance of said companies in driving underlying economic growth, in shaping innovation. Your perspectives on that?
Victoria: Yes, in short, I think that they're absolutely vital. I would say that, wouldn't I? So, the government has clearly made driving economic growth a real priority, and understandably so, despite some of those early fiscal decisions that last year's budget, perhaps not proving to be particularly helpful for businesses of all sizes. Certainly, they are now on the track of very much trying to push that rhetoric of driving economic growth.
My view is that supporting and backing ambitious, entrepreneurial companies of all sizes is what you need to do in order to drive economic growth. They are the engine of our economy. It's their investment in product and service and efficiency initiatives in pursuit of their own long-term goals of growth that help to drive and fuel this virtuous circle of growth within our economy. Not just by virtue of their own growth, but also in terms of the knock-on impact on their suppliers, their advisors, their customers, and so on and so forth. So, I think it is absolutely vital.
I think we here in the UK need to shout more about how good we are at nurturing business. We've got world class universities. We've got three out of the top ten academic institutions in the world, right here in the UK. That obviously plays a role in stimulating investment in talent development around those academic and research hubs. Although my funds don't play in this area, we hear time and time again, and you come across it, Hiten, in your job I am sure all the time that we've got a really thriving community of start-up and scale up businesses across a whole multitude of industries - technology, life sciences, fintech, you name it.
But I think what we need to ensure is that those powerful earlier stage dynamics aren't curtailed by a lack of recognition of the importance of continuing to support the scaling of those businesses through the middle stage of their life and into large cap territory, with a proper diverse funding ecosystem that allows them to continue on that growth path and grow into the large enterprises of tomorrow. Of course, that early-stage smaller company landscape is vital to as a hotbed of innovation and growth. But as a company grows it has more firepower to fund, as I said, its own investment in product and service and efficiency, and so on and so forth.
I think that that balance between maturity and growth is also exceptionally compelling, and something that's genuinely worth supporting.
Hiten: Clearly, right now, it's very "topic on vogue", both in specialist and mainstream media, there's all the column inches being written about this topic. In your mind, when you think about the UK economy, corporate world listings, what's been misunderstood or underrepresented in this debate, as someone who's on the front-line living this in practice?
Victoria: It's no secret that the UK stock market has underperformed other global stock markets, notably the US over a number of years. That has been heavily influenced by pure supply and demand dynamics. There have been relentless capital outflows from the UK listed markets over many years, partly because our pension funds have been net sellers of UK equities for over more than 25 years. Over that period their average allocation to domestic equities has fallen from over 50% down to just 4%. That has been a relentless tide of selling for the domestic stock market.
A corollary of that as well has been that wealth management companies, that wider wealth management industry, has increasingly taken asset allocation decisions to move more of their clients equity allocation towards global stock markets, by which really, we mean the US stock market. That has been at the expense of the UK markets.
There's data that we and a lot of our industry track from a research house called Calastone, which tracks flows into or out of equity funds. The latest print from that is that on 46 out of the past 47 months, so almost four years, UK equity funds have suffered outflows, and many of those months have been really significant outflows as well. You know and I know that the basic laws of economics tell us that if there's an excess of supply over demand, then prices should fall. It has been no real surprise to see that those dynamics have contributed to quite a stark underperformance of the UK equity market.
From my point of view, why should that matter, and what's being missed in that? Well, first of all, it matters because from here on in, that to me looks like an incredible opportunity, because here in the UK stock market, we can buy fantastic quality businesses at valuations, which are vastly below their international and specifically their US listed counterparts. Now over the long run that really should matter to generating returns. So, that opportunity side of it is appreciated, but it almost feels to us like everybody is poised to wait for the herd to start following that trend before they're all going to jump on that bandwagon.
I guess there's a broader piece, which I am not sure is so well understood or well represented, which is why it actually matters to our economy. I have a passionate belief that businesses of all sizes will flourish if they're faced with a choice, a choice in where to go and how to fund their long-term growth. One really valid choice might well be to go down the private equity route. For some businesses that will be absolutely the right decision to make, but for others, for a number of reasons, that might not be the right decision to make. The availability of a thriving stock market to support such businesses at the right stage of their evolution, I think, is a fantastic thing, and something which we should all get behind.
The LSE [London Stock Exchange] is one of the oldest and most prestigious stock markets in the world, and London's long been a key competitor on the global stage when it comes to listed markets. But I think there should be a recognition that unless we actually wake up and realize what has been happening to it and why they're not doing anything to try and change that perception, that negative, vicious circle of, ‘Oh, well, the UK underperforms, therefore we'll allocate less to it. Therefore, there are flows out of the market. Therefore, valuations remain depressed,’ which, of course, is self-fulfilling.
Unless we get ourselves out of that, it won't remain so forever. I think the positive for me is that there definitely seems to have been a waking up of governments and investors to that particular conundrum, but there is still a lot more that we could do. So, it's great to be invited here today to discuss it in a slightly different forum to where I would usually talk about this.
Hiten: I think the picture you paint for the UK is also a picture that's faced in many developed Western economies. Singapore faces a similar challenge as well. So, it's not a singular country challenge. You paint a picture that resonates for me of where you've got this negative feedback loop, or you're in this circle and spiral and breaking that. Help me bridge the gap here. So, you talk about opportunities to purchase, to find value.
You see it when a lot of private equity companies come in and take a company private, and so there're clearly international investors who come in and there're great opportunities to buy and take companies down.
What are we missing? Why cannot people see the value and the opportunity at that lens and level, and say, ‘Hey, I'll take a whole corporate over?’. Yet, the public, the mutual funds, or the funds flowing in that can't drive the same demand. What's bridging that gap? Why is there kind of recognition under one lens that there's value to be had here, but less recognized under another lens?
Victoria: Hiten, it's a brilliant question, and if I knew the answer to it, probably we wouldn't sit here talking about this particular problem. I mean, it's something that we talk about frequently with our investors, because I suppose from where we sit today, we have to believe, and I do believe that ultimately value will out. Quite how that happens is a little bit fluid, but one way that value outs in the very short term, and we'll probably come onto whether or not that is a good thing in the long term, is when a company is acquired from the market. Because it provides an immediate realization of what somebody might pay for an asset today, which is frequently 40, 50, 60% higher than where it's trading in the market at that time.
Even then, in several occasions over the past year, our team has voted against those takeover proposals, because we don't think it adequately compensates us for the long-run compounding potential of the business in question. That immediate premium goes to show that valuations on the UK market are depressed and should not remain so. However, I think that it does probably come down to a bit of that herd mentality. I think people have been bruised over the past couple of years in particular, those that have remained overweight, the UK have clearly seen that, hurt them in terms of relative performance, particularly as the US stock market has soared seemingly inexorably. In relative terms, that has been a painful trade.
What's fascinating about what's happening in the US at the moment is that maybe, just maybe, that is catalyzing a reappraisal of the fact that people have thought of the US as being a one-way bet for many years, but I'm not here to talk about that. I'm not an expert on the US stock market and don't profess to be, but I think even a minor reappraisal of those relative merits can only be a great thing for the UK stock market.
Hiten: Very interesting. Someone put it to me a few weeks back how the relationship between passive investing and active investing in the public markets, and some of the consequences it has. If anyone's going to do any creative value creation on a company, it's going to have to do something strategically, transform the business, make a fundamental change, for some reason, that needs to be done outside of the public markets, need to be done in the private markets.
We've got this dichotomy now that, “Hey? Any of those turnarounds, any of those material changes, value creation of that lens, needs to happen in the private markets. Because of the levels of passive investing or relative performance measures in the public markets mean that no one's willing to ride out a near term trade-offs. What are your views on that picture that's painted?
Victoria: I think it's nuanced. One of the great things, and I would say this because we are very active, our active share of the funds where I manage is very high. We have, as I've said, a particular bias down the market cap chain, where typically, I mean I am generalizing, but typically that probably is more prevalent. We're very, very long-term investors. Ideally, we'd buy something and hold it forever if it can continue to compound for us. I'm being slightly flippant, but you get the picture.
We don't have a time horizon on an investment. We certainly don't have a sell discipline that says, “Oh, here's a particular price target or valuation target, and once it reaches it, we'll sell everything and then redirect elsewhere.’ We're the opposite of that.
And one of the things that I find so fantastic about this job is getting to know the entrepreneurs and the management teams that are running these businesses. It’s fascinating and it’s such a privilege to sit across the table from those people who are doing that. And I think that if you spoke to all of our companies that we're invested in, I hope that they would talk about us as a shareholder on their registry, who is very open to short term investment to drive business value creation over the long term.
Now, unfortunately, as I've said, those supply and demand dynamics, the outflow dynamic clearly across the market does impact it. Because if you are under constant pressure as to the competition for capital, if you're seeing outflows, then of course, you have to make some very tricky decisions about that relative to what else is in your portfolio.
I think that the accusation that's often leveled at all public market investors with a very broad brush, that we don't see the value in investing today for long term gain is a misnomer. Albeit that, of course, the price on the screen can be volatile, and in a sense, one of the best things to do in a period of marked volatility, is to shut your screen, turn off Bloomberg, stop staring at the price and think about the business.
Because ultimately, you know, the course of a share price over multiple years will not run smoothly. But if you believe passionately that you're invested in a great business with the potential to compound in the long run, then you should be able to do that. You should be able to shut your eyes a little bit as to the short-term gyrations of the share price, unless you're looking to use it as an opportunity, of course, to top up and look at that long-term value creation opportunity.
Hiten: I think that's a really powerful statement and framing. I think you hit the nail on the head on a few points for me, because the world's obsessed at the moment with private equity, private equity investments, private markets. They're the only place that you can do value creation, the only place you can do these things, and I think I'm guilty of it, and I'm sure many of us are, of forgetting what are some of the core foundations that are driving active public market investing, as you frame.
So, there's a lot of what you framed is very aligned as to any form of investing, right? There’s probably a version of the mainstream narrative that's dropped that and associated that with only one channel.
If I build off that, just talk us through from your perspective in the role that you sit in, what are some of the hallmarks or traits that you're looking for when you're trying to identify a successful, particularly a growth stage or a mid-cap company, someone who, is innovating and is unlocking, new opportunities or a new market?
Victoria: Absolutely. The first thing to say is that as a market there is not one set of characteristics or hallmarks that defines a successful company. Of course, slightly being flippant again, but that is what makes a market, the fact that different investors perceive there to be success or opportunity in different types of company.
But of course, from my own lens, I've mentioned several times that we invest under a pretty strict investment process, and for us the hallmarks would be absolutely substantial long term runway of growth that's derived from the fact that a company has that significant barrier to competition in the form of its intangible asset strengths that's going to allow it to maintain its market position and, in a sense, defy the market theory of returns fading to the mean.
If you're earning excess returns, of course, the market theory would say, well, competitors are going to come in and compete that advantage away. And our argument for the companies we invest in is that they can protect themselves against that dynamic for far longer than the market might appreciate it. Therefore, we can benefit from the power of long-term compounding. In terms of what else, just more generally, we were actually doing a really interesting exercise just recently, looking at the long term performance of the funds, and what have been the most successful investments over the long term. And I think one thing as well that really stood out to us is to keep the discipline on all the time without getting your head turned.
But it is the power of high-quality earnings and reliability of earnings. The companies that we have owned that have benefited from recurring or subscription-based income streams and long-term relationships with their customers ideally under contract, but of course, some have a softer, nonetheless very long-term relationship with their customers. That was a hallmark of many of the most successful investments that we have made over many years.
If we look at the mid cap space in particular today because it's clearly the focus of your opportunities, one of the fantastic things is that there is such a diversity of it on the market. We have invested in businesses as diverse as kind of Rotork, which is an engineering business, which has a particular specialism in electric valves and actuators, so playing directly into that sustainability trend. We've got quite a big shareholding in Moonpig, which will be a household name for many of the people listening, but has astonishingly high market share in that online card market in the UK and the Netherlands. It got a 70 odd percent market share. Why is that interesting? It was a business that fundamentally derives its advantage from exploiting its superior data advantage.
If you think about it when you or I interact with Moonpig, it knows who we are, but it also knows who we're buying for. It knows how old they are. It knows what gender they are, knows what they like, what they find funny, what occasion it is! And now, increasingly, with a gifting attached, what gifts that they might like. That sort of self-reinforcing data advantage is really interesting.
We invest in a business called Alfa Financial Software, which is a provider of ‘heart and lungs’ software to lease financing organizations. Very broad, deep embedded software systems helping those organizations to manage the client lifecycle, global data, which many clients might actually, I'm sure use, which is a premium business research provider, increasingly leveraging the power of unique data sets.
I could go on and on, of course, but just the sheer variety that you can find in that stage of the market of these great growth businesses is this fundamental misnomer about the UK market that it's full of banks, miners, and oil companies. Now, for a passive investor, that's absolutely true. The market is tilted that way, but it's why I have a passion for reactive management, because you can look under the bonnet, and you don't have to buy all of those sectors. You can look for the opportunity lying underneath the bonnet.
Hiten: Very nicely put. Last one on this part. How should we feel when some of these companies get approached or get taken private? You know, Darktrace? There's a bunch of these types of names that again occupy a huge amount of headlines when it happens. From your perspective, is this a sign of success? Is this a challenge? What should people think when those types of situations arise?
Victoria: It’s both to be honest, we've got four live bid situations at the moment across our funds right now. I won't mention them, because it'll date the conversation. But undoubtedly, you have to take a view on every individual takeover bid as an investor. That's our responsibility to our underlying investors, and there will be a multitude of different things to take into account there.
Not just the price that's being paid by the acquirer, but also the risk aspect of it as well. My view is overall that it's a natural part of being a listed business. As a public company, in effect, you're up for sale every single day, because there's a price on a screen, and people can see what that is, and what people are willing to pay for your shares today. And they can make a decision about what premium they're willing to try and acquire it at. In a sense, that is a natural part of being listed.
The real challenge over the last couple of years has been twofold. One has been, as we've said, that valuations have come under extreme pressure in the UK market. Corporate acquirers have been having a field day with that, of course. But it means that it is all more difficult as a long term investor who can see that longer term value creation opportunity, to feel like you're being adequately compensated by somebody taking it off the market. And the problem is, of course, if you've got ostensibly a very high optical premium on today's share price that can be quite a hard argument to make, but you have to stick to your guns. So, the valuation piece is certainly one of the challenges at the moment.
The other one, you know, in a sense, is that there's been a real dearth of new listings on the other side. So, normally that dynamic is that, of course, businesses will get acquired from the stock market but there'll be a ready stream of new businesses coming to the market that helps to replenish the opportunity set. And that's the piece that has been acutely depressed over the last couple of years. It is always cyclical. Back when I worked for the Broking House, we used to sort of flippantly say that there's probably a three- or four-month window of markets feeling bullish before you get that flood of listings back.
And the reason for that is that, as many of you know, it is a long process, and an arduous process, expensive process to go through, to start with, to press that button, get all of your ducks in a row, appoint all your advisors, do the legals, audit work, etc. Before the point at which, you then go out and see investors and raise the money. To have the confidence to go through that, you almost need that little bit of bullishness in your pocket.
But I really think that the initiatives that are underway to make the listed capital markets more attractive as a venue are very welcome from that perspective. The LSE and the government have been working together to level the playing field on the regulatory and compliance burden of being listed versus the private avenue. That's definitely a really important piece of it.
The other piece of it is that, more ephemeral piece that we've been talking about, capital flows. That is the bit that's harder to turn, but it is certainly within everybody's gift. It's about talking about the opportunity as we have been doing here today.
Hiten: Awesome. Thank you for covering that so articulately. Back to you as the person, Victoria. Just a few more questions as listeners like to get a little bit of learnings from the people we have on the show on their journey. Tell us about what are the biggest challenges or interesting challenges you've faced on this journey that you think others will benefit from hearing about.
Victoria: Other than the more personal bits that I described earlier in our conversation, the slightly unusual different jobs that I had when I was younger. The greatest challenge over my career so far has been the experience of the last three years in active management. It's been bruising, to be honest, to have lived through a period where our style of investing has been so markedly out of favor.
Quality growth — this is value in a period of rising interest rates. It has not been a fun place to be, it's an obvious point to make. But also being tilted down the market cap scale with that dynamic about rates, but also critically, the whole piece around nervousness around the background macroeconomic picture. And that has been very difficult.
We lay out a big store about us, as you've undoubtedly heard from my conversation today, we think it's really important for our investors to know exactly what we do, because increasingly with more and more sophistication among that end investor base, they use us as a building block alongside managers who have a very different output and style footprint in order to blend us to achieve a smooth return profile for their clients. So, changing what we do would be absolute suicide, we would absolutely not going to do it. But it means that you have to, as my peloton instructor likes to say, sit in your discomfort. I guess, in terms of something that's really helped me on that journey, not only the importance of a really supportive team.
I've got a fantastic team of individuals around, and we genuinely love coming to work every day to work together, which is such a joy even when it's hard in the wider market. But it has also been reading around and listening to very experienced investors talk about their own career experiences in investing.
I remember I was reading a memo from Howard Marks of Oak Tree Capital. If you haven't read his memos, everybody should. They're fantastic. They make for fantastic readings — very sage advice often. He had this one line which sticks with me where he said, “In active management you have to be prepared to be wrong sometimes for quite a long time before you're proved right.” And Ithought, that is great advice, because it helps you to have the conviction of your own beliefs, even when sentiment around you is not rewarding you for those beliefs in the short term.
Hiten: It's very beautifully put. Hearing you talk, I can't help but feel that there's probably not that much difference when you talk about the investments around what goes on in the venture world, the private world. Everyone's looking for that innovation and value creation. It feels like there's just a bit of fashion, like there’s something that’s just in fashion, something that has a halo around it.
Now the world obsesses from hearing venture capitalists speak. They preach the virtue upon which you know everyone must follow, and they come in the mainstream. And when you're out of fashion, as you described the last two-three years, how much harder it becomes just to be heard and recognized. Even though all the points you're making lie on the same spectrum, are looking for the innovation, the ideas, the long-term value creation, and from a corporate perspective, as you say, they're all credible choices of capital sources. Thank you for describing that period.
Outside of work, are there any hobbies or interests that help you do what you do in your day job and help bring you to life?
Victoria: Definitely. Children, as you know, Hiten, are a great leveler. When you're with them, they are wonderful, but all consuming. My children are now eight and six. I've just come back from a week in Cornwall, where my oldest was busy trying to surf the biggest waves that he could possibly find. Age eight, terrifying. My youngest building sandcastles on a beach. Watching them get washed away by the tide, things like that.
You aren't sitting there or standing there terrified, watching them thinking about the investment landscape. You're in the moment, you are necessarily in the moment with them, and I think they are a great leveler from that perspective. Also, it's a cliché, but I love getting out in the fresh air and exercising. I think, during Covid, in particular, it was such an important learning from that very difficult period, where all of us were stuck at home, not seeing anybody, being overworked, weren't able to have the help with children that you'd usually hope to have. Even if it was just 20 minutes per day, my husband and I made it an absolute priority to get out either on a run, or use our peloton, or do some yoga, or whatever it was.
It really doesn't matter what it is, but it gives you that moment of relaxation for your brain as your body is exercising. And I'm a big believer in that. I think it's so important to give your brain that headspace, because only by doing that can you allow it to relax and make good decisions. The foundation of good decision making is something which is a belief that pervades our team.
Hiten: Almost like, less is more and quality over quantity. Thank you for sharing. Last one from us, we always invite guests to throw the spotlight, to call out an individual or a company that is impressing you right now, and you think that listeners should take the time to look up and learn a little bit more about.
Victoria: Absolutely. I found this one really difficult, Hiten, if I'm honest. I think where I'm going to throw the spotlight is on an individual. It's an individual whose name is Morgan Tilbrook. He founded a company called Alpha Group, which he founded in 2009 and listed on the stock market in 2017. He built up that business, which is involved in FX [Foreign Exchange] risk management consultancy services, and has shifted into the provision of alternative banking solutions to clients.
And throughout that whole journey, up until when he stepped down at the end of last year, has absolutely been laser focused on culture of the business. For him culture has meant always putting the customer first, even when that doesn't mean absolutely maximizing short term profit. It's about generating those loyal, long-term, customer relationships and the importance of talent development within his team, hiring great people and developing great people.
I recently recorded a podcast with him, and he was talking in a really interesting way about how he thought that it wasn't always a great thing to promote the person who's best at a role to being the leader of a team of people doing that role. Let's say for sales, you shouldn't necessarily promote the person who's best at sales to lead a team of salespeople. And why? Because, actually, they don't have a lot of empathy with those who find it a little bit more difficult. They find it very difficult to develop people who aren't immediately brilliant at it. I thought observations like that were just so interesting in terms of how to think about growing a business for long-term success.
His other key mantra is equity incentivization. So, always been a really big holder of his own stock, but in what in an unprecedented move. Certainly, I've not seen it before on the stock market. When he stepped down from the business at the end of last year, and at that point, he'd grown it to being a roughly a one billion market cap FTSE 250 listed company. He made the decision to gift a proportion of his equity, 28 million pounds worth of his own shares, to his senior leadership team and the next layer down, in order to help to preserve that culture of long term equity incentivization for the future.
And I thought what an amazing thing to do. And, when I spoke to him about it, he said, ‘It wasn't entirely altruistic. I want to know that the people who are running my business, the business that I've built up when I'm no longer there, are incentivized in the same way that I was incentivized’. So just such an unusual, interesting set of priorities in terms of creating that long term value. So, there's my spotlight for you.
Hiten: I love it. Thank you for sharing. And it'd be remiss of me not to mention that you have your own podcast, Victoria. Just give us a couple minutes on that, so listeners can know what it's about and where to find it and check it out. There's going to be some pretty interesting stories for them to check out.
Victoria: That's very kind of you, Hiten. The podcast is only recently launched, within the last year. The name of it is Stock Exchanges. Catchy, huh?
If you search Stock Exchanges and my name, Victoria Stevens, on any of the key platforms, Spotify, Apple, etc., then you should find it. Or it is on Lionstrust website as well. And actually, the premise behind it echoes many of the things we've been talking about today. I was trying to get away from a sole focus on outputs, valuations, the quantitative aspects of what comes out at the top end of a fund and get to our inputs. What are we looking for in the businesses we invest in? Ultimately, that's what makes a star like ours tick. It’s are these companies going to create value over the long term? So, it's almost helping to tell the story of the companies, the entrepreneurs that founded them in, hopefully, a really interesting and innovative way.
Morgan, as I just mentioned, has been on as one of my guests. I've had Tim Warlow, who's the CEO of Fever-Tree, which will be a familiar name to many of your listeners. Andrew Rennie, the CEO of Domino's Pizza. So, there's a whole load of them on there. Hopefully, your listeners will see fit to check it out. I'd love to get a few more listeners from different spheres to listen to it. Thanks so much Hiten!
Hiten: Awesome. Victoria, thank you so much for coming on the show and sharing your very articulate reflections on a space that's of great interest to many. Appreciate you taking the time out of your day and thank you for being on.
Victoria: Thanks so much for having me.
This transcript has been edited for clarity.
