Airlie Funds Management’s John Sevior to retire with Matt Williams to take over

The veteran stockpicker will retire in June and leave the fund manager he founded after three decades in the industry, as Magellan names his replacement.

Airlie Funds Management portfolio manager Matt Williams, co-founder John Sevior and deputy head of Australian equities Emma Fisher. Picture: Jane Dempster

When he retires in June, veteran stock picker John Sevior will spend six months “unlearning” the habits and rituals finetuned over a decades-long investment career, before contemplating what to do next.

Mr Sevior, who co-founded boutique Airlie Funds Management in 2012 and sold it to Magellan Financial for $100m six years later, will in the coming weeks hand over the reins to Matt Williams, Airlie’s new head of Australian equities.

Mr Sevior’s departure comes weeks after his earn-out agreement with Magellan came to an end, preceded by investor speculation whether he would stay on in the business.

“Look, it’s something I had been contemplating. After 30 years doing pretty much the same thing, (the end of the earn-out) gave me pause to reflect and consider what’s next. And I’ve chosen to retire and to do other things, to make space to do other things,” Mr Sevior told The Australian.

“I‘m going to take six months off and really just take some time out without any pre commitments and see how I feel at the end of six months … I’m not putting any pressure on myself to do anything. Six months in and then I’ll think about things.”

John Sevior in 2015.

The most memorable moments of his career come down to individual stocks. At the top end is CSR spin-off Rinker, which was taken over by Mexican cement maker Cemex in 2007. That deal saw Mr Sevior and Mr Williams net $1bn for clients at Perpetual.

The biggest loss, meanwhile, and the one that he still hasn’t gotten over, came around the same time as the Rinker win: an offer for APN News and Media was on the table but was too low for Sevior, whose Perpetual Investments owned 15 per cent of the company.

“We tried to muscle up and extract a few more cents. They basically told us to get lost, we took umbrage, and then the global financial crisis happened.”

Prior to setting up Airlie with co-founder David Cooper, who left the business in 2019, Mr Sevior spent 17 years in investment management and leadership roles at Perpetual, including a decade as its head of equities.

Global fund manager Magellan scooped up the money manager in early 2018, for about $100m in stock, and launched the Airlie Australian Share Fund months later as it looked to bolster the Australian retail funds management business. Prior to this, Airlie had courted only institutional and high net worth clients.

Mr Sevior’s investment vehicle, Marsev Pty Ltd, received 2.7 million Magellan shares when Airlie was acquired five years ago. At the time, the global fund manager was trading at above $20 a share, with the stock later peaking above $60 in the lead up to the Covid-19 pandemic. The stock currently trades at about $8.80.

Marsev was the sixth largest shareholder in late 2021 with about 2.5 million shares. But per Magellan’s last annual report, Marsev in October held just 539,944 shares, with another 203,761 options.

Despite a horror year for Magellan last year, including the loss of CEO Brett Cairns and chairman and chief investment officer Hamish Douglass, as well as tens of billions of dollars in outflows, Mr Sevior said he didn’t regret selling the business and that Magellan was still a good fit.

“Despite all of the travails Magellan has had at the corporate level, our day-to-day interactions with them, which was the basis of the deal, have been absolutely brilliant and above and beyond what we expected in terms of back office support and marketing distribution,” he said.

“They’ve helped us build a retail brand that we couldn’t have done as a stand-alone wholesale entity, so that’s worked very well.”

But Mr Sevior’s exit could rattle already jaded Magellan shareholders who would have been hoping to leave the drama behind in favour of a reset in 2023.

Investors will also be keeping a close eye on Airlie’s performance post-Sevior: on a one-year basis the Australian Share Fund has underperformed its benchmark by 1.1 per cent, while on the more crucial three-year term it has outperformed by 4.3 per cent.

Airlie has about $8.5bn in funds under management with the bulk of that still coming from the institutional segment of the market. The retail segment, about $400m, is the fastest-growing part of the business, Mr Williams added.

In a bid to further attract retail funds, Airlie will in the coming months launch a small cap strategy to complement its Australian Shares Fund.

Once he leaves the business, Mr Sevior’s portfolio management responsibilities will pass to Mr Williams, who joined Airlie in 2016 and before that worked with Mr Sevior for a number of years at Perpetual.

Emma Fisher will serve as Mr Williams’ deputy head of Australian equities and portfolio manager of the Airlie Australian Share Fund.

Mr Williams steps into the top investment job at a time when active managers have never had it tougher, with index-tracking funds increasingly grabbing market share and the once-safe institutional segment, including the big superannuation funds, increasingly bringing investment responsibilities in-house.

The veteran fundie acknowledged the growing pressures on the industry but said performance was what mattered most.

“The basic premise remains the same. The product we’re selling is sensible outperformance of an index, and what we’ve been able to demonstrate over 30 years, John and myself, is that we’ve developed an investment process and a system of hiring people and developing a culture that gives us the best chance to actually achieve that aim of outperformance,” Mr Williams said.

“So our focus hasn’t changed but yes, the pressures are increasing.”

Magellan CEO David George on Tuesday paid tribute to Mr Sevior, noting his contribution to Airlie and the broader Magellan business.

“As the founder of Airlie, John successfully established, built, and led an outstanding Australian equities funds management team and business. His retirement marks the conclusion of a remarkable career where he excelled as a portfolio manager and as an industry leader,” Mr George told shareholders.