Veteran stockbroker and investment manager, Kieran Kelly has retired after 38 years in the securities industry.
His career began in 1979 as an investment journalist on the Australian Financial Review. His proudest moment there was being the only John Fairfax journalist to gain an interview with Kerry Packer following the death of Kerry’s father, Sir Frank Packer. It was during this interview that Packer revealed his estimate of the value of the Channel 9 broadcasting license.
“Son, if I put this license on the block for $200 million, people would be lining up around the block to buy it,” Packer told Kelly. This estimate, when published in a front-page story in the Financial Review the following day, was met with scepticism. It was vindicated four years later when Allan Bond famously paid $1 billion for the same license.
Kelly also was the first journalist to write at length about the appalling state of New South Wales’s finances under the Wran government. An analysis of a series of NSW Auditor General’s reports in the early 1980s revealed that the State was essentially broke. This cataloguing of mismanagement under the then Labor government led to an attack by Neville Wran, the then Premier, on Kelly on the floor of state parliament. Kelly remains very proud of this achievement and his appearance in Hansard.
His career in investment management started in 1983 with PNC International, the Australian subsidiary of Provident National Corporation of Philadelphia. Serving an apprenticeship under the well-known investment manager Simon Cooper, he learnt the ropes as an equity dealer and trainee portfolio manager.
Wanting to experience the “sell” side, he transferred to corporate stockbroker Potts West Trumbull in 1987. In a strange twist of fate, his career in stockbroking began on the day of the October stock market crash. During his time at Potts West Trumbull and subsequently Prudential Bache Securities, he worked in both institutional advice and equity capital markets.
In 2003 he decided to strike out on his own and formed Sirius Fund Management as a specialised investment manager for high net worth families and small to medium corporations. Sirius was fortunate to land the AMP Society as its first advisory client. Building on this early success, the business grew strongly over the coming decade based on conservative investment principles and rigorous analysis.
In recent years, Kelly became an outspoken critic of the blending of investment banking, private equity and retail stockbroking. He reserved his particular criticism for the Myer Holdings and Channel 9 floats.
“These are two of the worst examples of exploiting public gullibility with flawed valuations of long established brands, by private equity firms and investment banks.
“The Channel 9 and Myer Holdings floats were classic examples of mispricing of risk and a ‘pump and dump’ philosophy that assumed the vendors – in both cases private equity firms- only obligation is to get the float away at the highest possible price.”
“The retail investing public suffered horrendous losses as a result.”
“The only way to avoid this, as ASIC appears to turn a blind eye, is to prevent the inclusion of forecasts in prospectuses, similar to what happens in the United States. This should be particularly the case when the private equity vendor is floating a highly leveraged structure based on fanciful investment forecasts.”
Kelly, after selling the Sirius business, said that while his days of hands-on investment management are over, he retains an interest in equity and debt markets and particularly in the media. He is a regular commentator on the Ticky Fullerton business program on Sky News. He has also been approached to sit on several public company boards, and is still evaluating proposals.
“I enjoy being involved in media and find it noteworthy that when I joined Fairfax in 1979 it was a takeover target and in my last year of professional investment management it’s still a takeover target.”
As the published author of three books, his immediate goal is to complete a fourth which describes the process of developing a good investment manager.
“I believe the process of becoming good at investment starts in childhood, and I’m trying to describe the process, in my latest book.
“I’ve long believed that no one can claim to be experienced in investment until they have managed other people’s money through two booms and two busts.
“The boom and then crash in 1987, the tech boom in the late 1990s and subsequent bust and the GFC crash in 2008 all had a profound effect on how I managed money and advised clients. There is no substitute for experience in investing money.
“Despite my years in the industry, I still learn something new every day,” Kelly said.
