Magellan money adds two names to billionaires list

The co-founders of the Magellan managed funds group are raking it in on the back of a soaring share price.

Magfellan’s Hamish Douglass and Chris Mackay.

Australia has two new billionaires, with fund managers Hamish Douglass and Chris Mackay joining the list of the wealthy elite for the first time as shares in their Magellan Financial Group soar to record highs.

Magellan shares hit an all-time record high of $45.49 during trading on Friday, and have risen a startling 91 per cent since the start of the year alone, meaning Magellan is among the best performing shares in the ASX 200 in 2019.

The company’s shares have also more than doubled in the past 12 months and the founders hit the billionaire mark on Friday.

Douglass and Mackay co-founded the firm in 2006 and have built it into a funds management giant with more than $83 billion worth of funds under management, though neither has day-to-day management roles.

The pair had previously sat together for four years after starting at Schroders Australia in 1990, bonding over a mutual admiration for legendary investor Warren Buffett.

They later established Magellan, floating it on the ASX with a $100 million market capitalisation in July 2004 with the support of billionaire James Packer.

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Magellan is now an $8bn company, though Douglass stepped down as managing director in October last year and is now chairman while retaining the title of chief investment officer. Mackay is the managing director and portfolio manager of listed investment company offshoot MFF Capital Investments.

Both Douglass and Mackay maintain their large stakes, though, cementing their billionaire status and moving them up The List of Australia’s Richest 250, which they appeared on in late March when published by The Australian, in 128th and 134th positions respectively.

Douglass has Magellan shares worth about $981m and Mackay about $840m. Magellan has about $62bn invested in global shares such as Starbucks and Alphabet, the parent company of Google, another $13bn in infrastructure company shares and $7bn in Australian stocks.

Douglass also has about $26m shares in another LIC in Magellan Global Trust, and smaller shareholdings in the Magellan Global Equities Fund, High Conviction Fund and Global Trust, according to Bloomberg.

As well as his $840m worth of Magellan shares, Mackay has a stake of about $190m in MFF, which has achieved a return of almost 18 per cent since January 1. He also has a small shareholding in Seven Group Holdings, the mining investment and media company headed by billionaire Kerry Stokes and of which he is a board member.

Seven Group shares have risen 35 per cent this year.

Douglass has also collected about $36m in dividends from Magellan in the past year, while Mackay has taken home about $31m. Douglass also owns property in Sydney and a 40ha holding in Moss Vale in the NSW southern tablelands that he paid $1.925m for last year.

MFF holds about 25 stocks in its portfolio, led by financial services payments giants VISA and Mastercard, which are up 24 per cent and 34 per cent respectively this year, Home Depot, the American version of Bunnings that has risen 12 per cent in the same time, and Bank of America, up 15 per cent.

Mackay’s investments also include other US banking stocks such as JPMorgan Chase, which has increased 13 per cent this year, as well as an exposure to Asia via the Singapore-listed United Overseas Bank and CapitaLand, one of the region’s largest real ­estate companies.

United Overseas Bank stock is up 2 per cent and CapitaLand has increased 7 per cent since January 1. On the flip side, shares in US pharmacy chain CVS have fallen 19 per cent.

Douglass also manages shares in big US stocks and is a firm believer in that country’s economic future. He has backed large companies such as Facebook, Apple, Oracle and Microsoft, though one of his best performers has been Starbucks.

The coffee chain has big expansion plans for China and has even opened an outlet in Italy’s commercial capital of Milan. While the jury is still out from coffee fans there, Starbucks investors such as Douglass have enjoyed a 22 per cent rise in the company’s share price this year.

Douglass’s Magellan Global Fund now has more than $10bn invested, with 46 per cent of its holdings in US shares, 18 per cent in emerging markets and 13 per cent in western European companies. Its holdings include German software company SAP, up about 31 per cent this year, and US company HCA Healthcare, down about 1 per cent.