Christmas has come early for the bank’s shareholders with the decision to slightly increase the 2024 dividend – despite a single-digit decline in the net profit and cash earnings.
Beating the market benchmark is never easy, with 72 per cent of Australian actively managed global equity general funds trailing the S&P World Index in the six months to June 30, 2024. Domestic equity funds performed slightly better, albeit against a significantly lower bar set by the S&P/ASX 200 Index.
Not drowning, waving: the story behind James Mawhinney
Whatever criticism people may level at James Mawhinney, the entrepreneurial fund manager who still has a grand design for Dunk Island real estate, they can never say he is going down without a fight. He has hit back against ASIC, for considering him a “flight risk”, as well as receivers to one of his funds for being “misleading” and the fund’s trustee for being “unscrupulous”.
In the recent past he has also gone into battle against the press, in particular the ‘Australian Financial Review’ and ‘The Guardian’, for their reporting of his investment management activities. Right now, he is battling all these foes while in lockdown with his partner and four-month-old baby in Melbourne. The 36-year-old’s story is worthy of a book, rather than just a collection of media articles.
In a letter to unit holders in the IPO Wealth Fund this month, Mawhinney said the trustee Vasco’s move to appoint the receiver and provisional liquidator, Dye & Co, as being “driven by self-interest”.
The value of the IPO Wealth Fund had been “destroyed by an unscrupulous trustee and their accomplices who have set out to discredit our business and myself personally to further their own agenda”, he said. “Driven by self-interest, Vasco raced off to court to take advantage of these events to bring the IPO Wealth Fund to an end. This has resulted in a significant and rapid destruction of value that could easily have been avoided by simply working with us to get a favourable outcome for investors… I consider this to be nothing short of a form of extortion to ensure Vasco, Dye & Co and their lawyers continue to earn fees for years to come at the expense of unitholders,” he said in his letter to unitholders.
Earlier this month, in what Mawhinney’s company, Mayfair 101, described as a “massive overreach”, ASIC requested that the Federal Court freeze the company’s assets and prevent Mawhinney from leaving the country. Mawhinney claimed he was not given sufficient notice of the court hearing and that ASIC “leaked” information about it to the press. He also said that he was willing to hand over his passport to the authorities if he’d have been asked. He didn’t need to point out that getting out of Australia right now, especially from Melbourne, is not an easy thing to do.
Mayfair 101 said in a statement: “In 2020 Australia we have a situation where a government agency can have a court impose onerous restrictions on travel and the operations of a business without prior notice to those impacted, the media can be invited to such a hearing where the accused has no knowledge or legal representation and the result of a supposed private hearing is then leaked to journalists for one-sided reporting. How can this be allowed to occur in a democracy?”
Apart from what some, including the regulator, see as exaggerated prospects for his Dunk Island and Mission Beach real estate sales and luxury resort, Mawhinney came under scrutiny from the press and ASIC – as well as the highly regarded fund manager Platinum Asset Management – for his ‘Mayfair Platinum’ business which has offered itself as an alternative to bank deposits. This is a claim which would always attract the attention of a regulator. The Mayfair Platinum brand had to be discontinued in June this year after being challenged by Kerr Neilson’s Platinum Asset Management over its usage.
Mawhinney is an old-fashioned spruiker, charming and very much at home with a microphone in his hand and an audience to spruik to. The extent of his investment dealings and their exact governance are not all that clear, however, and investment commentators have suggested the recent appointment of a provisional liquidator and ASIC’s move in the Federal Court may shine a light on what has exactly transpired.
He started the privately backed investment group, Mayfair 101, in 2009, mainly with personal and family money, he said in an interview with ‘Investor Strategy News’ in February this year. He diversified his funds into the ‘real’ space, focusing on Queensland tourism and related property ventures. Mayfair 101 bought all the ‘buyable’ land on Dunk Island, for instance, while leasing the piece that he couldn’t buy, intending to modernise facilities and restore the tourist destination to its former glory. The Group also invested heavily into development sites and residential properties at nearby Mission Beach, the mainland departure port 4km from Dunk.
In that interview, he described the investment firm as a “cross between the Virgin Group and Berkshire Hathaway in its philosophy”. This means it aims to be both opportunistic and tactical as well as strategic in terms of its direction, and with a tendency towards control over the underlying investments. The opportunism in tech is obvious and ongoing, but with fixed income Mawhinney observed the opportunities from very low bank interest rates on term deposits being offered to retirees, in particular, which led to the establishment of their investment facing brand, Mayfair Platinum, which has raised over $100 million from wholesale clients in Australia.
Late in 2019, Mayfair 101 made an investment in Australian Business Credit. It subsequently increased its stake. The smaller or private credit markets don’t have the overheads of the banks. “It’s not difficult to provide better rates than the banks, nor is it difficult to provide better service,” Mawhinney said at the time. “We think that today’s ‘non-banks’ are the banks of the future.”
The firm’s registered headquarters are in London but most of its administrative operations are based in Melbourne. Mawhinney said that, in terms of its new investment funds, such in the technology and fixed income markets, Mayfair 101 tended to co-invest and absorb the first loss, if necessary, on its balance sheet. “We are still involved in the technology area which we know well,” Mawhinney says. “But more recently have invested in emerging markets too, such as India, which are an important part of having a diversified portfolio,” he was quoted as saying back in February.
