Lisa Myers – Beyond the Trading Desk
Portfolio Manager Lisa Myers is a bit of a whiz kid, having done everything from practicing corporate law in New York to teaching legal writing and research at Georgetown University Law Center. Today, she manages billions of dollars for Franklin Templeton. Beyond Bulls & Bears had the rare pleasure of an in-person chat with Lisa recently and got to learn a bit more about who she is beyond the desk.
Beyond Bulls & Bears: Lisa, your background is really quite varied and it even includes a law degree. We’re just curious – how is it you first came to be interested in investing?
Lisa Myers: I had studied economics as an undergraduate, and was always fascinated by the cause and effect relationship between monetary and fiscal policy and the economy. However, my exposure to actual companies and my interest in securities really didn’t start until I began to practice law in New York and I became involved in corporate law.
I started my legal career when debt securitization became a primary means of funding large real estate transactions, which led to numerous IPOs, large acquisitions, and mergers in the real estate business. I loved discussing growth strategies with management, understanding and helping develop optimal tax structures, and thinking about the competitive landscape and what deals might be beneficial for particular companies.
When I met Mark Holowesko, who was CIO of Templeton at the time, he explained how Templeton invested, including the role that industry analysts played in understanding long-term secular industry trends which facilitated Templeton’s ability to identify companies whose future the market did not understand or was mis-valuing. I was intrigued. Mark gave me the opportunity to work with the team and apply my knowledge of the real estate industry to the process, which I thoroughly enjoyed. That was when I made the decision to move from law to investments.
Since then, I have had the opportunity to look at many industries and companies. I am learning all the time, which for me is a constant challenge that I adore.
Beyond Bulls & Bears: Sir John Templeton’s pioneering approach on international investing continues to be the foundation for how Templeton manages its investment strategies today. How has he impacted you in your investment philosophy in particular?
Lisa Myers: The focus of Sir John – in terms of investing – was to buy what others failed to understand, or were too short-term in their thinking to value effectively. Not surprisingly, times of crisis were times of plenty for Sir John. When a political or economic or social upheaval caused investors to become mired in confusion or uncertainty that prevented them from making a decision, Sir John would invest based on his longer-term view of a company’s fundamentals in light of a longer-term secular view and understanding of the competitive environment.
Analysis and study leading to a thorough understanding of an industry – the competitors, barriers to new entrants, and secular changes impacting a particular industry – were fundamental to Sir John’s unique assessment of how a company’s business would change and grow over a longer time period, and what that growth should be worth. Having insights the rest of the market didn’t necessarily have enabled him to buy companies that ultimately delivered more value than their current valuation suggested.
Studying and thinking about those kinds of secular changes, like Sir John did, and trying to be ahead of the curve with regard to uncovering the companies which will benefit from such changes, occupies a good deal of my time.
Beyond Bulls & Bears: Templeton has long been known as a global investing brand. Have you noticed that the concept of global investing itself has changed while you have been involved in this industry?
Lisa Myers: When I started 15 years ago, the average U.S. investor had less than 5% of his or her portfolio in global equities. We often would ask at presentations, “How many of you have a Japanese or Korean TV in your house? How many of you drive a foreign-made vehicle?” Invariably, many hands in the audience would go up. We would point out that investors were supporting a myriad of global companies in their daily lives, and could not imagine living without their goods and services, yet, they did not want to invest in these companies, despite the growing returns that they were supporting. Often, you could see an investor’s epiphany as the point was made. Yet, it took a long time for U.S. investors to increase their exposure to such non-U.S. companies even in developed markets.
Emerging markets were for the big risk takers in those days. Today, while the financial crisis and ongoing global market volatility has made investors reticent about investing in equities at all, investors have been more interested in faster growing emerging markets which have received the biggest inflows from investors willing to buy global equities. This is a huge change. And investors who take advantage of buying exposure to sustained emerging market growth via the stock of companies in both developed and emerging markets are coming in at highly discounted prices.
Beyond Bulls & Bears: So your confidence in the future of the global economy and capitalism has been unshaken?
Lisa Myers: Yes. I am confident that governments around the world will ultimately find solutions for the problems, many of which center around debt, that are currently negatively impacting the global economy. It is unclear at this point how long it will take, but there are many pockets of strength around the world which can provide positive counterbalancing forces to these issues including corporate discipline which has led to large quantities of cash, which is providing flexibility and a basis for growth, rising incomes of emerging market consumers and disciplined emerging market governments responding to inflationary pressures, and previously repressed populations in North Africa and the Middle East who now have the promise of freedom and potential increased development and consumption power.
These are all big positives. It is one of those times in history where one can take advantage of near term uncertainty to make investments in the future at discounted prices.
Until next week, Beyond Bulls & Bears leaves you with a quote from Sir John Templeton:
“The only certainty about the future is that it will be different from the past.”
IMPORTANT LEGAL INFORMATION
The risks of investing in foreign debt and equity securities include currency fluctuations and political and economic uncertainty. Investments in developing markets involve heightened risks related to the same factors, in addition to those associated with their relatively small size and lesser liquidity.