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At 74, Keir Nelson, one of the godfathers of Australia's money management industry, should be enjoying a quieter life like many septuagenarians. He focuses on investing his own portfolio of stocks, philanthropy, and his passion for travel.
Instead, over the past six years, the self-confident billionaire has been determined to recover the $585 million that was wiped out of his personal fortune.
Nelson's fortune took a hit after his 21.5 per cent stake in Platinum Asset Management fell by almost 80 per cent since mid-2018. That was the year he resigned as CEO of that money management group.
For the past six years, Keir Nelson has been determined to recover the $585 million wiped from his personal fortune.credit: Steven Siewert
“I have already made up for that loss I incurred through my activity in the markets,” Nelson said. “I worked hard.”
Last year, Nelson's fortune was estimated at $1.24 billion Australian Financial ReviewAnnual Rich List.
Nelson's wealth also declined significantly after his divorce from his wife, Judith Nelson, in 2015, which resulted in their joint 43 percent stake being split. Her wealth was estimated at $1.43 billion last year.
In a wide-ranging interview, Nelson discussed his current portfolio, which consists mostly of international stocks; The shots that helped him make up for his platinum loss; As well as investments that did not achieve good results.
Nelson also explains why his platinum stake is not for sale.
Nelson co-founded Platinum Asset Management in 1994 with Andrew Clifford. Nelson, originally from South Africa, founded Platinum after a stellar career in money management at Bankers Trust. One of the first mandates to invest in platinum came from billionaire George Soros, a hedge fund trader.
Nelson led Platinum through years of good and bad performance, but in 2018, he decided to step down as CEO and was succeeded by Clifford.
In the following years, Platinum's performance, funds under management, and stock price began to deteriorate. Nelson, who remained a director on Platinum's board, began agitating privately and then publicly for management and strategic change, including the removal of Clifford as CEO.
Andrew Clifford succeeds Kerr Nelson as CEO of Platinum Asset Management, holding the dual roles of CEO and Chief Investment Officer. credit: Dominic Lorimer
Clifford was originally hired for the role with Nelson's blessing. When he became CEO, Clifford also retained his position as chief investment officer. As the fund manager's performance declines, this dual role will become a sore point.
Clifford avoided commenting and entering into a public dispute with Nelson.
In 2022, Nelson left the Platinum Board of Directors out of frustration. He said the board had not responded to the changes it believed were necessary to halt platinum's decline.
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Then in early 2023, Nelson actually put his platinum stake up for grabs. Nelson is Platinum's largest shareholder.
Nelson has since changed his position on his intention to sell his stake, in part because some of the changes he had been calling for at Platinum have now occurred, including Clifford stepping down as CEO. The idea of merging Platinum with another fund manager was also not attractive.
Nelson said he was not concerned with a platinum outcome that would have been “just smashing the companies together and cutting costs.” “My position four years ago was to use 21 percent of my stake to appoint a new CEO,” he said.
“I was more interested in seeing who would lead this change because smashing things together without changing the structure within the investment team was not going to be helpful.”
He confirmed that one of those suitors was Phil King's Regal Partners, which had an active role in consolidation in the Australian money management sector.
Regal Partners acquired a 5.6 percent stake in Platinum in late 2022, but sold out last year.
Another expected contender for the stake was veteran fund manager Jeff Wilson and his company that bears his name. However, Nelson said he had not spoken to Wilson or anyone from his company.
Nelson said that if Wilson was offered his platinum stake, it would likely be through an opportunistic third party.
Wilson declined to confirm whether Wilson Asset Management had been contacted. Instead, Wilson said the big question for Platinum now “is whether the new CEO and new management team can turn the business around.”
Last December, Clifford was replaced as CEO by Jeff Peters. Peters previously worked at Columbia Threadneedle Investments and Putnam Investments. He also ran McKinsey's asset management practice.
Nelson participated in interviewing executive candidates who would replace Clifford, but was not involved in the final decision that settled on Peters. He has since had one meeting with Peters.
Following his appointment, Peters conducted a review and announced changes to the leadership and structuring of the various platinum funds, and $25 million in costs would be taken out of the business.
Nelson said he expects Platinum to lose some momentum as it goes through the current restructuring. “They have the staff needed to rebuild the company,” he added. Asked if the cuts were enough, Nelson said more savings, in addition to the $25 million, could be found on the administrative side of Platinum.
Jeff Peters replaced Andrew Clifford as CEO of Platinum Asset Management last December.credit: Peter Ray
In March, Platinum revealed it had suffered another hit to funds under management, with a $1.4 billion mandate loss. In February, its funds under management reached $15.6 billion. It was a significant decline from mid-2018, when its funds under management reached $25.7 billion.
The main driver of funds under management is the performance of the asset manager. Platinum's performance has suffered recently due to… Underweight positions in US technology stockswhich affects their relative returns.
Nelson said he would monitor the performance of the two major platinum funds for a sign that the turnaround is working. “If you change your performance within six months, people will start to notice it. Then, the recoveries stop, and after 12 months, you can start to see some flows.”
Nelson has a personal portfolio of approximately 100 stocks. In contrast to Platinum, it has been a large owner of some US technology stocks over the past six years, some of which have more than doubled in value. “I'm a very patient investor. I have long holding periods. We've been in a volatile bull market,” he said. However, he believes US technology stocks are starting to “get a bit expensive now.”
The largest positions in his portfolio were in Amazon, Meta, Microsoft, Alphabet, Booking Holdings, Flutter Entertainment, Fujifilm, Siemens, Samsung, General Electric, and Saint-Gobain. More recently, he said he has built a senior position at Puma.
He also owns Toyota and a number of gold stocks including Barrick. In the Australian market, it has a stake in Paladin Energy.
As an example of stock picking, he explained why he likes Fujifilm. He said it represents the company's successful reinvention of itself throughout its history, most recently with its Diosynth biotechnology division, which is one of the largest biopharmaceutical manufacturers in the world.
Less successful investments in Nelson's portfolio were bets on Canada's Mercer International and Japan's Rakuten.
He said about a third of his portfolio was exposed to the United States.
Nelson said it's not just about picking individual stocks, but about understanding different economies, finding opportunities and removing uncertainties, then determining the size and timing of your bet.
He said that Chinese stocks look cheap now, but there are still questions about the ability of the Chinese government under President Xi Jinping to boost domestic consumption, especially under the current circumstances. China's turbulent real estate market It represents a major impediment to growth.
As for Platinum, he is waiting and watching with bated breath.
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