David Aylward, portfolio manager of the Grant Samuel Tribeca Australian Smaller Companies Fund, recently spoke to the Australian Financial Review. He said he believes all the great investment advice passed down has been really useful, up until the day it’s wrong.
A career in small-caps and mid-caps has left him with one rule that he subscribes to: get the credit right.
“That’s one. You’ve got to get the credit right. Is this balance sheet fit for purpose? Can it do the job it’s supposed to do? And if you haven’t got that, you’ll end up with a whole lot of problems and be chasing your tail around. And when it finally blows up you’ll realise it was the balance sheet that was putting pressure on management to tell lies about things, because they had to get the share price up, because they had a rights issue.
“If you can’t have the balance sheet you want, you want to be damn sure you’re part of the solution.
“Beyond that, I reckon everything’s up for grabs.”
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