It’s not often that an opportunity presents itself where you can both make money and contribute to a good cause. A new listed investment company (LIC), Hearts and Minds Investment Limited (Hearts and Minds), of which I am Chairman, is one such opportunity.
Hearts and Minds is seeking to raise up to $500 million and list on the ASX in November (ASX:HM1). There are many LICs on the market, but what makes Hearts and Minds different from most is that it has a charitable goal.
Of course, an objective of Hearts and Minds is to make money for investors, but Hearts and Minds will forego any investment fees and instead make donations to designated medical research charities every six months. Also, the Hearts and Minds Board and Investment Committee members have waived rights to be paid director and committee fees. The lead arranger and brokers for the Offer have waived broker management fees.
The donation amount for each six-month period will be equal to 1.5% per annum of the average monthly NTA (net tangible assets) for the previous half-year. If the portfolio increases in value, the donation amount will increase.
Investment in medical research is critical, and this field has historically provided instances of strong returns. For every dollar invested in medical research, it is estimated that an average of $2.17 in health benefits is returned.
High-conviction picks in a concentrated portfolio
Aside from the charitable goal, the Hearts and Minds LIC is aimed at investors seeking exposure to a high-conviction portfolio of global equities.
The portfolio will be concentrated, with only about 25 stocks. Hearts and Minds will take long-only positions on Australian and international listed securities based on the highest conviction ideas from two groups of fund managers:
- 40% of the portfolio will be held in about 10 securities based on the recommendations of fund managers who present at the yearly Sohn Hearts and Minds Investment Conference.
- 60% of the portfolio will be held in about 15 securities based on the quarterly recommendations of five leading fund managers: Caledonia, Cooper Investors, Magellan, Paradice Investment Management and Regal Funds Management.
Hearts and Minds has been established following the Sohn Hearts and Minds Investment Conference, which is in its third year now. At this Conference, industry professionals share their expertise and provide their best investment ideas. It sells tickets and the proceeds go to medical research. It has raised $8 million to date.
The Hearts and Minds IPO thus provides shareholders with an opportunity to benefit from the expertise of each fund manager, some of whom are not readily accessible to retail investors.
Investors will also benefit from having a portfolio that is not concentrated on the philosophy or investment thesis of just one fund manager.
Initially, the designated charities are: Victor Chang Cardiac Research Institute; Black Dog Institute; The Brain and Mind Centre, Sydney University; Charlie Teo Foundation; The Children’s Hospital at Westmead; Florey Institute of Neuroscience & Mental Health; Centre of Human Psychopharmacology, Swinburne University; Multiple Sclerosis Research Australia; Orygen; and Royal Prince Alfred Hospital, Research.
Strong momentum with more than $225 million in commitments
Hearts and Minds has already attracted strong support with numerous cornerstone family investors having already committed more than $185 million. Members of the Board and the Investment Committee and their associates are committing more than $40 million to the Offer. Heats and Minds will not accept oversubscriptions.
The Board has a strong mix of business, social enterprise and philanthropic experience. It includes Ariadne Australia director Dr Gary Weiss, Wilson Asset Management founder Geoff Wilson. UBS Australia CEO Matthew Grounds is a proposed director.
The Board of Hearts and Minds has appointed Rory Lucas as the CEO. Rory has worked in the Australian and global equity markets for nearly 30 years. Rory’s specialty is in trade execution, portfolio construction and risk management. His previous roles include managing funds at Rothschild Australia Asset Management, a senior equity facilitation role at UBS, and trading and execution roles at the Commonwealth Bank of Australia.
The IPO opens on Monday 15 October 2018 and is expected to close on 6 November 2018. Shares in Hearts and Minds are expected to start trading on the ASX on 21 November under the code HM1.
This is an investment supported by some of the best and brightest fund managers and investors in the nation, with a genuinely worthwhile philanthropic goal.
I encourage you to read the Prospectus. Applications under the general Offer can be made by completing the application form attached to the Prospectus or online through the application form accompanying the electronic Prospectus. Applicants under the broker firm offer should contact their broker for application details. The Lead Arrangers for the Offer are CommSec, NAB and Crestone. Brokers include Bell Potter, Evans Dixon, JB Were, On-Market Book Builds, Ord Minnett, Paterson, Shaw and Partners, Taylor Collison and Wilsons.
Watch the video of my introduction to the Hearts and Minds Investments Limited Offer, including some of the medical work that will benefit.
Chris Cuffe is Chairman of Hearts and Minds Investment Limited and Founder and Portfolio Manager of Third Link Growth Fund. He is also a Co-founder of Cuffelinks. This information provided is general and does not constitute personal financial, tax or legal advice. Any participation in the Offer is subject to disclaimers in the Prospectus.
View Chris Cuffe’s appearance on ABC’s The Business program here.
Download Independent Investment Research’s IPO Research Report on HM1 here.