Yale versus NZ Super Asset Allocation

Disclaimer: Punakaiki Fund Limited has lodged a Product Disclosure Statement (PDS) for a Public Offer. Please read the PDS if you are considering an investment. 

Yale Investment Office have just announced their latest results (good, especially with the lower risk they carry) and their target asset allocation for 2019.

I always find it interesting comparing their portfolio construction to that of our Super Fund. Which portfolio would you prefer to be holding as the stock market wobbles?

The chart below shows how Yale’s portfolio has evolved. NZ Super has 82% in equites, bonds and cash – a situation that Yale has not seen since 1992 or so.

The philosophy differences are astonishing. Yale’s Dave Swensen wrote the book on Institutional Funds Management, and led Yale early into truly diversifying assets – away from US stocks and bonds and into, in particular, alternative assets such as Absolute Return, Venture Capital, Private Equity (Leveraged Buyouts). Their results have been superb, and also resilient to market downturns.

The returns from Venture Capital are particularly strong, as Yale is one of the worlds most desired investors for funds so gets the pick of the crop. Their 20-year weighted return from Venture Capital is 25.5% per year (as any June 2017), and their expected return from Venture Capital going forward is 16%, each of which are the highest across Yale’s asset classes.

It’s highly unlikely that any other investor can do as well as Yale (another peers) investing in Venture Capital, and only the top 10% of Venture Capital funds generate those outsized returns (and Yale has access to them.)

But it still amazes me that New Zealand’s Super Fund allocates essentially none of their portfolio to the class, and that they are so exposed to the stock markets.

Obviously our take is that we, at Punakaiki Fund, are playing in a space that is seriously short of investment funds, that New Zealand has a huge advantage in generating global companies (that need growth capital) and that we could use the funds, and competition, to help those companies.



Posted in NZ Business | Leave a comment

A Letter to Shane Ellison – CEO of Auckland Transport

Dear Shane

You’ve begun your role as the Chief Executive Officer of Auckland Transport at a moment of crisis, with hundreds of Auckland families coping with the death of their loved ones on the city’s roads every year. You have a mandate for change, a laundry list of initiatives, and a public and media ready to hear your actions.

No doubt you’ve heard – formally and informally – from your Board, from the Mayor and Auckland Council, the road lobby and cycling and walking groups. However, I am writing to you as an individual, and from the perspective of your end users – parents, sons, daughters, car drivers, motorbike riders, cyclists, pedestrians, bus riders, and train passengers. People.

I ask for your leadership – to guide Auckland to become the safest city in the world by instilling a world-leading safety culture at Auckland Transport.

You face an overwhelming number of tasks, varying in scope from the trivial to multi-year projects. to do. I am sure, for example, that you have read the Road Safety Improvement Review and its pages and pages of suggestions. But a long list of tasks means that nothing is prioritised; so while a to-do list will be helpful, the real solution is a change in culture, and this needs genuine safety leadership for Auckland Transport, and from you, as its leader.

Your leadership to save lives in Auckland can start by ensuring that your direct reports take a safety-first approach to everything they do. And you can set the expectation that they will set the same standard for their teams, cascading in turn these values to all Auckland Transport workers and contractors, and by extension, everyone living in and visiting our city.

This will be challenging – some people will resist putting safety first, and others will be slow to start to live the value. Everyone will complain about the extra burden. But it will also be inspiring – as we all see the visible evidence of change, and the change in culture that empowers, requires even, everyone to just make things happen.

The challenge also pales before the mandate – to save hundreds of Auckland’s families from coping with the loss of loved-ones who are fatally harmed on Auckland Transport’s network in each and every year.

This looks like a daunting assignment but it is an achievable goal. I know this from my own experiences observing and being part of safety turnarounds at two very large overseas industrial sites, each with thousands of workers and contractors. In both cases recordable injuries and fatal risks plunged, and production soared. I have looked back at my experience to give you some unsolicited advice about to tackle this sort of turnaround.

I hope you take up this challenge, and create a lasting legacy.


Suggestions for leading a safety culture.

1: Taking personal responsibility for safety of all people using Auckland’s footpaths, bike paths and streets. Live the safety value in your own actions, including:

Talking and meeting with the families of everyone who dies on your watch. Turning up to the funerals, hospitals and homes of the deceased, injured and traumatised. Taking your management team with you.

Starting every meeting, large or small, with safety. These can be a brief as a ‘safety contact’ – a short anecdote on safety (good or bad) that focusses the meeting on the greater aim.

Leading daily safety walks (and rides!) with your management team to observe activity, identify hazards, have structured conversations with staff and contractors, and assign responsibility to fixing hazards.

Demonstrating safety leadership by uncompromisingly putting safety first in planning, and showing visible leadership with dramatic actions like closing streets and lanes to address critical issues, changing work practices, and more.

Conducting layered audits with several levels of staff (and contractors) to deep dive into narrow topics to identify and fix larger gaps in processes.

Reviewing close-out reports for every injury-causing incident with your management team, giving fatal harm incidents even more attention. Ensuring that multiple root causes are properly identified, and Auckland Transport puts in temporary and then permanent fixes to prevent further injury. This is not about punishing individuals – but a quest to learn how individuals can be physically safe.

Requiring the same level of commitment from all of your management team and staff, all leaders of contractors, and all of their staff.

Bringing the board of directors along for the journey, including meetings with families, a safety focus in meetings, and on-site visits. To be fair, the board, and chair, should be with you arm in arm as you drive this journey forward.

2: Systematically identifying and removing hazards, both large and small, using a safety management system for all of Auckland:

Ensuring every employee and contractor is actively identifying hazards. The easiest way to do this is to mandate safety walks (for all supervisory staff), and safety meetings where hazards are identified.

Using the cascaded safety walks, management review of injury accidents, internal and external (public) reporting to identify and classify (severity and risk) hazards across the Auckland Transport ecosystem. Record these in a central system.

Creating and assigning (with permission) actions to Auckland Transport staff and/or contractors for all identified hazards. These is done during or just after the safety walks, in the formal reviews after injury-causing incidents, and by a self-selected or assigned internal team for publicly submitted reports.

Creating the bias and authority for immediate action for these hazards – actions that remove hazards within hours or days with quick fixes. You might need to buy a lot more road cones, but the trick with quick fixes is to give broad authority to all staff within a limited budget. Give everyone permission and authority to make things happen, even it it means going to Bunnings and buying planters.

Systematically reviewing the more serious hazards to upgrade the quick-fixes to permanent solutions that design the hazard out.

Having a bias for very low cost solutions – and keep a close watch on the incessant proposals for more expensive and slower processes to create permanent fixes. Is there a way to do it cheaper and faster? Would the funding be better spent on more implementations?

3: Report to us on your progress

Publish a list (and map) of all identified hazards and allow members of the public comment and vote.

Report, by hazard, progress to put in place temporary and permanent fixes to every hazard. Provide photos, stories and showcase safety heroes from within your staff and contractors.

Measure and report on the output statistics – not just fatality statistics, but hazards identified and closed out, the number of injuries and near misses, and the source of those reports. I will judge you not by the number of fatalities, but by the number of hazards you identify and the speed and methods by which they are closed out.

Work with NZTA and Auckland Council to address the risks that cross your domains. Report on and track the hazards in their domains.

In Summary

This list is not about finding people to blame and remove, but about cascading safety leadership throughout the organisation so that everyone can come home safely each day. If you adopt an inspirational approach then you have a great chance of taking us with you on your safety journey – and we’d all like to be inspired almost as much as we’d like to be able to walk, cycle and drive our streets in safety.

Yesterday my wife had a meeting in the cafe in the Auckland Transport building, on a morning when a man in his fifties was fatally wounded after being struck by a car on a suburban Auckland road. Despite this the mood in the cafe was upbeat – shockingly so when so many of us hold Auckland Transport responsible for that death, and that of so many others, including a 15-year-old earlier this month.

Each and every fatality is preventable. The person in their 50s was in an area “notorious for accidents”. The 15-year-old was killed in an area that had been repeatedly identified as a fatal risk hazard to Auckland Transport.

Nothing meanwhile has been done to fix the issues I identified after I saw a man pass away on The Strand four years ago. There are still no signs for cyclists descending Parnell Rise, the gravel on The Strand remains and there is no sign of a separated cycle lane.

We wait for the next preventable deaths.

The honeymoon is over. I ask that you hold yourself responsible for all future injuries and fatalities under your purview, and do what you can to reduce harm to us all.

I will personally hold you to that standard, and already hold Auckland Transport’s Board, and Auckland Transport’s staff and contractors to that same standard, and I constantly ask myself whether I am doing enough as well.

Lead us to a safer place.

Posted in NZ Business | Tagged , | 4 Comments

Liars and Fools: Climate change deniers

I have, somewhat randomly, made it a ongoing task to reply to climate change denial comments and articles on NBR.co.nz.

Thankfully over the years we’ve seen the quality of the writing in NBR and the comments themselves improve, but there are still a few writers or commenters who seem to thrive on denying climate change. Denial a surefire way to incite a good volume of comments, but ultimately there are really only two explanations for this behaviour from writers and commentors. They are either liars or fools.


Over the years I have wondered whether some people were actually being paid not just to write articles but also to make comments supporting climate change denial across a wide range of media. The articles and comments often seemed to be so outrageous in their disregard for facts, spouting of pseudoscience nonsense and reference to other deniers that I could think of no other plausible explanation.

It turns out I was correct – it emerged that there were actually groups (e.g. in USA, but it seems also in Russia) being paid to deny climate change. These groups were and still are not just writing articles and haunting comment sections, but have proven ability to capture mainstream and cable network media time. They do make for much better television – simplistic pseudo science and strident denial, for example, plays a lot better on Fox News, CNN or in columns than complex science and deep considered discussions of the possibilities.

This systematic media attack, which follows in the footsteps of the anti-tobacco lobby and is often aligned with the extreme right wing partisan political groups, is arguably one of the biggest civil acts of irresponsibility of our time, and some media (Fox News is the obvious one) have been complicit in that.

It’s hard not to argue that these professional deniers deliberately lie to try to present their arguments (and get more air time), and the fact checking required to hold them to account is painful and time consuming.

But it’s over for them – too many people know that there is no basis to their rhetoric, and society is increasingly intolerant of them.

In the USA the tobacco lobby was finally stalled by losing substantial court cases, and the same approach is underway for climate change denial. Exxon Mobil, for example, just lost a case where they tried to prevent investigators from Massachusetts and New York from digging in to their decades long systematic climate change denial. Over the coming years we can expect a series of US lawsuits to result in some major behavioural changes, and material loses for the affected companies and people.

However lawsuits take time, and they are a peculiarly American approach to resolving these sorts of issues. Other countries, including New Zealand, traditionally use legislation to lower public harm from private activities like selling tobacco, toxins in food and toxic emissions. Arguably we should see laws against paying for or otherwise supporting deliberate and malicious climate change denial, just as we did against arguments (including via advertisements) that smoking cigarettes was healthy.

The worst of these deniers, I foresee, will not just be seen as pariahs, but may also be condemned and convicted by civil and criminal court systems. As the impacts from climate change become more and more obvious and abhorrent society’s perspectives on these liars will worsen. History will not be kind.


The purpose of the professional liar deniers is to prevent action against climate change and to preserve the status quo. They do this by using a wide range of media to create and support legions of people in the second category – fools.

I’ve often wondered whether some of the worst deniers in this category just didn’t ever study chemistry, physics and or advanced mathematics, and don’t know how what they don’t know. As the Dunning-Kruger effect explains, they are perhaps so uninformed about the science that they don’t realise how stupid they can sound. This is worse when they are smart and successful in other areas, as that can make them over-confident about their abilities in climate science. My favourite comment from this sub-group is the one where CO2 is breathable so clearly not harmful.

Dumb as that sounds, I would still back everyone’s ability to learn how climate change works, but they have to have time and motivation.

I expect most in this group don’t have the time, and even if they accept that they don’t really understand the science, they have put their trust in people who are not credible climate scientists. This rapidly becomes a faith-based argument – my expert is better than yours.

It is, of course, ludicrous to believe that a loud yet uninformed TV personality, a marginal website or extremist politician or columnist knows more than tens of thousands of professional scientists who constantly cross check each other. But the scientists don’t help themselves either – they are far less accessible, and the deepness of the topic makes for boring columns and TV. It’s also too easy for harried editors or biased platforms to broadcast the loudest voices, and to ignore the quiet boring ones with nuanced but serious messages..

Once the liar perspective has conned someone into believing in climate change denial, it’s very difficult for them to change their mind. That’s just human nature.

It’s especially difficult if they have a legacy of denial statements, private or public. After all it’s hard to admit that you’ve been conned – and that you have been acting like a fool.

But while avoiding embarrassment is be powerful motivation to pretend to believe that anthropogenic climate change is not real or a threat, it’s pales before the genuine existential threat we are facing.

So let’s encourage those who have found themselves on the wrong side of truth to please stop behaving like fools and either do their homework or to put their trust in the world’s top scientists. We can point them to the clear and present evidence of climate change, like disappearing glaciers, and to the most obvious fallacies that they are spouting, but ultimately we need to point to the liars who have duped so many.

Happily millions of people are changing their minds. One good example is Jerry Taylor, who was thoughtful enough, during his previous job as a professional climate change denier at right wing think tank ALEC, to dig in to the facts, and then strong enough to change his mind.

We should appreciate just how difficult this is, and reward those who do have the courage to learn and change, especially those who do so earlier.

Deniers with a Political Cause

Some deniers, from either of the above categories (liars or fools), are active deniers primarily because they are supporting a particular political agenda. They deliberately ignore the “other side’s” arguments and preponderance of evidence.

However we are seeing generational shift in political parties, and increasingly doing something about climate change is becoming table stakes to get elected. As a society, a world even, we need to help all politicians and their supporters understand that climate change is well beyond politics.

Hobson’s Choice: Liars or Fools?

All climate change deniers, whether they accept the label or not, are stuck between two poor choices – admitting that they are smart and educated enough to believe climate change is real but that they have been deliberately lying, or admitting that they are not smart or educated enough or that they have listened to the wrong people and have been taken for fools. Most are in the second category.

Old Fools

Sometimes the latter is tied up with age – where people are just too old to care about learning something new, and are content to be foolish. (On the other hand climate change from CO2 emissions was reported in NZ well before anyone alive today was born). We generally accept that older people can have outdated views, and tolerate the occasional slip-up, and most are smart enough to accept that times have changed and understand that a few of their perspectives are dated. (I hasten to add my own parents are well ahead of the times.)

But sometimes see well known people from another era suddenly emerge in the press as climate change deniers, perhaps with a dose of racism and/or sexism. While their rhetoric may be great for generating page views and controversy, it’s sad for all of us to watch.

Unfortunately the required speed of response to climate change is faster than the speed of generational change. So let’s make sure they are told, gently via their editors and friends, and firmly by society, that their statements are not just foolish, but dangerous to all of us and damaging to themselves. Let’s give nothing to denial.

What about the deliberate liars, or even those who just say they are trolls looking for a reaction? Let’s stop tolerating them, and start digging into their motivations and funding, while ensuring we capture the evidence for those future lawsuits.

Those who get it

There are two other categories of people, when considering attitudes towards climate change. The first is those who acknowledge the established facts and science, and understand that we need to lower emissions and mitigate the climate change that is upon its and emerging. They know it’s important, and relatively urgent, but there are competing priorities as well. This is the consensus view.

The second group also have some grasp of chaotic systems, positive response and exponential growth, and have read some of the work concerning the ocean currents, ocean acidification, trapped methane and the lubrication effect of the melting ice/water interface. Those people are terrified that our ecosystems may become uninhabitable, at the very least our lifestyles irrevocably destroyed, and many are increasingly (and not at all usefully) moved to the point of despair on whether we can do anything at all. They know we need to act immediately, and dramatically, in order to have a chance of a normal future. This is a more marginal view, but if we are going to create great TV and articles the those are voices we should be hearing more of. They are not just credible, but it’s increasingly concerning that they may well be right.

Posted in NZ Business

We want you: 2 new jobs to help manage Punakaiki Fund

We’ve just posted two new jobs for LWCM – one senior and one junior.

The Investment Manager role will be delegated significant responsibility, and the right person will eventually lead a team of people. We have a lot to do and this person will get it done. The person we hire could come from a wide variety of backgrounds – career switchers (e.g. from law, high growth companies, consulting) are welcome.

The Investment Analyst role is primarily about creating and curating powerful financial models, but also helping with everything else we do. Chris and I both have a solid history in creating big excel models, so the pressure is on.

In reality we are looking for great people – and will tailor the roles to suit.

These roles will be our first new hires, and will be significantly important to the future of Punakaiki Fund.  Let us know (lance@lwcm.co.nz) if you know anyone who could be suitable, or apply yourself either via email or through the Seek links above.


About LWCM

LWCM is the manager of Punakaiki Fund Limited, an investor in privately-held, high-growth New Zealand companies, currently with $37m of assets, 20 investments and 676 shareholders. Punakaiki Fund is the only VC fund open to retail (as well as wholesale/institutional) investors, and has grown from $1.5 million to $37 million in assets in just 4 years. We continue to to raise funds each year and are targeting $100 million and an IPO late in 2019. Our current investments include Coherent Solutions, Conqa, Melon Health, Weirdly, Raygun, Populate, Mobi2Go, Vend, Timely, Onceit and Devoli. Three of the companies qualify as Maori in business, seven have women founders or co-founders and ten have (or have had) founders with married or otherwise committed partners in the business.

LWCM was founded by Lance Wiggs and Chris Humphreys.

Lance was the sole advisor on the sale of Trade Me to Fairfax for $750 million in 2006. He has founded or co-founded several companies, advised hundreds of NZ companies on funding, growth, turnaround and exit – including over a hundred formally through NZTE’s Better by Capital and Better by Design programs. Lance has an MBA (Strategy, Finance) from Yale and a B Tech (Product Development) from Massey, and work experience including McKinsey & Co., BHP Billiton and EBRD. Lance is a director of eleven portfolio companies.

Chris is a CFA Charterholder, has two finance degrees (Otago and Canterbury) and a BSc, and was into heavy analytical work in his time at PwC Corporate Finance and Pacific Fibre. He grew up in the South Island and currently lives in Te Anau. Chris is a director of two portfolio companies.

Chris, Lance and LWCM have made 66 investments, with 25 made in the last year. LWCM runs two to four fundraising exercises for Punakaiki Fund each year, and has successfully completed four regulated retail offers.

With significant recent growth of Punakaiki Fund and more growth ahead LWCM has created two new roles to assist with the increased workload across a wide range of functions.

Investment Manager Role

The Investment Manager will take responsibility and accountability for increasing amounts of LWCM’s work, including sourcing, assessing, closing and advising portfolio companies, raising funds, PR and promotions and governance, compliance and administration.

Initially we expect a significant amount of time wil be spend on taking over and improving existing processes within LWCM and Punakaiki Fund. Beyond that the work will be varied and range up to potentially highly complex advisory tasks, financial modelling, negotiation and contract forming. The role will continue to evolve as LWCM hires more staff and Punakaiki Fund expands, moving to and beyond an IPO.

We also expect the Investment Manager will take on responsibility (through an investment allocation) for an initially small, but growing part of the assets under management. You will get hands-on experience, responsibility and accountability. 

Skills and experience

We are looking for great people who can bring some, but not necessarily all, of the following skills:

  • Great comfort with excel and numerical analysis – preferably but not necessarily financial analysis (a CFA would be excellent). 
  • Strong writing and research skills, including comfort with legal documents.
  • Smart, inquisitive wide ranging perspectives on the world, industries and business models asked by strong analytical and strategic thinking.
  • Ability to take responsibility – to lead, manage, self-organise, make decisions and deliver results individually and as part of or leading a team.
  • A degree or post-graduate degree in an analytical field of study, along with an excellent academic record.  A CFA/CA/CAIA qualification and/or MBA (with finance concentration) from a top business school would be beneficial.
  • Five or more years of demonstrated work experience in a related field. 

You may have experience in law, corporate finance, consulting, be from the high growth start-up sector, enterprise or the VC/PE sector. We are willing to contemplate a wide range of backgrounds and are looking for evidence that you are able to learn quickly to be able to help assist LWCM, Punakaiki Fund and companies we have invested into. 


Investment Analyst Role

The Investment Analyst will be actively involved with many areas of investing, portfolio management and Punakaiki Fund administration. The Investment Analyst is expected to add capacity to the existing LWCM team, and lead projects to deliver results across a wide range of areas. 

The Investment Analysts work will be centred around developing and maintaining financial models for existing and potential portfolio companies. These will be underpinned with researched assumptions and data, supported by dashboards and will help drive decisions and valuation recommendations for LWCM. You will also help monitor and support Punakaiki Fund portfolio companies, perform due diligence for potential new investments and draft, maintain and track investment cases. 

The Investment Analyst will also perform include high quality research, initiate and implement process improvements for the management of Punakaiki Fund and LWCM’s internal processes, and complete one-off task such as assisting with capital raising activities. You will also assist as Punakaiki Fund approaches its IPO in 2019.

We expect that the role will evolve over time as you gain experience and achieve results, with more time being spent assisting portfolio companies, financial reporting and investing with the prospect of responsibility (through an investment allocation) for an initially small, but growing part of the assets under management.

Skills and experience

We are looking for great people who can bring some, but not necessarily all, of the following skills:

  • Great comfort with excel and financial analysis
  • Strong writing and research skills, including comfort with legal documents.
  • Smart, inquisitive wide ranging perspectives on the world, industries and business models asked by strong analytical and strategic thinking.
  • Ability to self-organise, make decisions and deliver results.
  • A degree or post-graduate degree in an analytical field of study, preferably finance along with an excellent academic record. You may have or be studying towards a CFA or similar. 
  • At least two years of demonstrated work experience in a related, financial, field. 

You may have experience in corporate finance, consulting, accountancy or PE/VC, or have performed finance roles for the high growth start-up sector. 

Posted in NZ Business

Rename the NZ Super Rugby teams

The current Super Rugby NZ team names are appalling:

Crusaders: A name celebrating religion based genocide from centuries ago (Thanks to @sportsfreakconz for that definition)

Chiefs: White people’s interpretation of a Māori culture across the region. Perhaps next time we could actually ask local iwi what name they would like to choose.

Hurricanes: We don’t even have hurricanes in the Southern Hemisphere. Lazy.


Highlanders: Celebrates Scottish colonists – not exactly friendly to the tangata whenua.

Blues: It’s like they ran out of time – and then copied the South Africans.

It’s well beyond time for these to be renamed, using an inclusive process that considers local iwi, the players along with marketability.

Posted in NZ Business | 4 Comments

Punakaiki Fund Interim Accounts – September 2017

Cross Posted from PunakaikiFund.co.nz

We have released our September 2017 interim accounts, which are the half-year financial snapshot. These show that the assets of Punakaiki Fund were $31.56 million at the end of the quarter, of which $29.25 million was investments.

The accounts show a profit of $1.145 million for the half-year, but we believe the more important piece of reading is the statement of cash flows.  This shows that net cash used in operating activities was $213,000, which represents just 0.67% of total assets, or 1.35% on an annualised basis.

It helps that the cash costs were partially offset by dividend income of $138,000, which combined with a small amount of interest income represented 40% of the total cash spent on operating activities.

Most of the cash spent was on management fees, at $292,000. These fees are charged at 2% of the net asset value, plus GST, and paid each quarter in advance. The main other costs of $51,000 were for items such as insurance, audit fees and accounting fees.

Looking forward the good news is that we have received dividend income of over $200,000 for the current half-year to March 2018, so we will see another good net cash result for the current six months and the year-end accounts.

Obviously as the size of the assets under management grows we expect to see higher costs, as we increase the amount we pay for management fees, external suppliers, and we will also need to increase director fees. We do remain vigilant to ensure that the costs do not get out of hand versus the amount of assets, which is the primary reason we want to ensure we are at $100 million before we are a listed company.

Please get in touch if you have any questions.

Posted in Punakaiki Fund

Punakaiki Fund Raises $3.44 million

I am very happy to report that the December Offer for Punakaiki Fund raised a total of $3,438,750, from 187 investors.

Those investors included 45 new investors, so there are now 670 investors holding shares in Punakaiki Fund.

We are very thankful for that level of support.


Posted in Punakaiki Fund