Bradley Radin of Templeton Global Smaller Companies FundLiam Sharp
It's not nice for folks who've got their weight down to brag. But some fund companies really are more light-footed and nimble than others. Check out Bradley Radin and his $1.1-billion Templeton Global Smaller Companies Fund, which invests in a raft of extraordinarily fit and compact businesses from South Korea to Spain. It soared 61% over the 12 months that ended Jan. 31, and boasts a 10-year average annual compound return of 5.9%, twice the gain for the typical global small-cap fund. Radin, 42, sat down with Andrew Bell for some small talk.
I buy at the point of maximum pessimism, where there's a big disconnect between share price and the long-term prospects of the company.
I want to see that problems are well-known to the Street. I want to see the sell side being negative. If there are 10 sell-side guys following it, I want to see eight sell recommendations.
When everyone likes the stock, it's posting all-time highs and nobody is talking about potential risks, then it's priced for perfection. I don't want to touch that because sooner or later perfection ends.
My first job was in advertising, as an account executive at Young & Rubicam in Hong Kong. It made me a bit skeptical of wonderful presentations. I saw some great presentations with very little behind them.
Financials and consumer stocks really helped the fund over the past year. Some of the financial stocks had been priced at ridiculously low levels after the 2008 market crash, Asian banks in particular.
During the bear market, a couple of stocks disappointed me wildly. One was Carnegie, a sort of pan-Scandinavian brokerage. It was pretty much nationalized, so I lost all of my investment. It didn't have meaningful direct exposure to toxic subprime, but it made a loan to one of its biggest clients, which went belly-up when Iceland blew up.
We bought Biovail Inc. in mid-2008. It had a ton of cash on the balance sheet, and a really big dividend. The stock had a checkered past, but the reality is that the underlying company is pretty strong.
Tempur-Pedic International Inc., the mattress maker, was a $37 (all currency in U.S. dollars) stock in late 2007, and we were buying it for about $7 in late 2008. It got down to $4 a couple of months later and has since rallied to $28. It's a name that everyone hated in 2008 because everyone knew housing was terrible. But it was a good company with a good brand name and franchise.
I'm trying to figure out what companies are going to earn in five years, not over the next quarter.
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