Can Mike Cannon-Brookes make you money? Tyro Payments says no

Mike Cannon-Brookes might be making waves as an environmental activist but as Westpac’s move on Tyro Payments is about to reveal, anyone in recent times who hoped the Atlassian tycoon might lead them towards investment success has been badly let down.

Tyro initially popped up on the wider public radar as an investment by interests connected with Cannon-Brookes in the mini-bull market of 2019. Even a year ago the stock was as high as $4. It’s down 60 per cent in 12 months.

On current assumptions, any Westpac bid for Tyro will most likely come in near $1.60. Cannon-Brookes was a shareholder pre-IPO, but for the majority of retail investors who had hoped he might sprinkle some stardust on their portfolio, Tyro has been a flop.

What’s more, Tyro investors will now most likely find their investment converted into a tiny parcel of stock in one of the weaker of the major bank stocks. They will be shunted from a start-up to a bank hardly known for innovation or indeed technology smarts.

The Westpac share price is down by around a third over the last five years. This is not typical of the bigger banks. Commonwealth Bank, for example, is 25 per cent higher over the same time period.

Throughout the last two years the arrival of Cannon-Brookes – or interests connected to him – into any investment has created headlines. And there have been many. From the energy group AGL Energy to intriguing private equity investments in second-hand electric cars to the purchase of trouble-plagued Queensland holiday retreat of Dunk Island.

Investors might reasonably have hoped that following Cannon-Brookes with his undoubted financial ability might pay handsomely. Certainly, there is a long tradition in the local sharemarket of tycoons pointing towards successful new areas of investment – think of Kerry Stokes with mining or Kerry Packer with gambling.

Atlassian co-founders Mike Cannon-Brookes, left, and Scott Farquhar.

Cannon-Brookes is listed fourth on the The Australian’s The List – Rich 250 with a valuation of $26bn. And while he may have made most of his high profile moves on the Australian market, he is different to earlier stars in that the source of his fortune – his listed company – is based offshore.

The bulk of the The List valuation comes from the Nasdaq-listed software group he founded with Scott Farquhar two decades ago. Investors fortunate enough to have bought into Atlassian back in 2017 hit an eight-bagger as the stock moved from around $US50 ($79) in 2017 to top $US400 three years later.

But more recently, investors supporting Cannon-Brookes on Wall Street have taken a bath.

Atlassian is down a thumping 50 per cent over the last year. What’s more, the Atlassian performance has been considerably worse than its home index – the Nasdaq – which is down 28 per cent over the same term.

Back on the ASX, Cannon-Brookes’ most controversial activity has been at the struggling energy group AGL, where his activist position has prompted a sequence of tortuous manoeuvres at board level and various attempts to create a better and cleaner future for the group.

AGL is up 10 per cent over the last 12 months while the ASX is down 8 per cent. Then again, the Energy sector is up 20 per cent, which suggests on strict financials an investor would have made twice as much in an energy index fund.

Perhaps investors might be better to regard Cannon-Brookes as a useful pilot in the market for property rather than shares.

According to the The List he has spent some $200m on property in Australia over recent years.

Unlike the transparent nature of the share market, we can’t see how well his interests are faring in bricks and mortar – but it’s probably better than the sharemarket.