The London South East, Investing Matters Podcast, Episode 20, Alex Schlich, founder and managing director of Yellowstone Advisory

LSE 00:01

You are listening to Investing Matters brought to you in association with London South East. This is the show that provides informative educational and entertaining content from the world of investing. We do not give advice, so please do your own research.

Peter Higgins 00:17

Hello, and welcome to the Investing Matters podcast. My name is Peter Higgins and today I have the huge privilege of speaking with Alex Schlich, former fund manager and currently the founder and managing director of Yellowstone Advisory, an investor relations advisory company. Hi, Alex. How are you?

Alex Schlich 00:36

Very good. Thanks, Peter. Very good. Nice to have to be chatting to you this lovely Friday morning.

Peter Higgins 00:41

Lovely to speak with you to Alex. Now, Alex, we've encountered each other we've spoken with each other. We've shared some information about educating others. So I'm really pleased to have you on this Investing Matters podcast. I want to start our conversation if I may, with regards to your early upbringing. And what led to your interest in investing?

Alex Schlich 01:02

That’s an interesting question to start. And like many of you other interviewees, I didn't think you'd start there. So I think I got an interest in investing back in the 80s. When I came across the concept of perks for shareholders. The first share I actually bought was a company called Burton Group, where actually if you held shares in Burton Group you had, I think it was a 25 or 30% discount or purchases at Burton and Burton also own Principles for men.

And that was the first show that I bought, it was based on the discounts that you got as a shareholder. And the actual as it happened, that the shares actually did really well, which was probably not a good thing. Because I hadn't done a lot of research into buying the stock in the first place. But that's when I first got into investing. And you know, I followed that by looking at other companies around that time.

Peter Higgins 01:51

Love that. So you went to uni, you went to Sheffield University, and you've got a Bachelor of Arts in business studies. So obviously that interest led to you're doing business studies.

Alex Schlich 02:01

Yeah, that's right. Yeah. Yeah.

Peter Higgins 02:03

And tell us about the studies there. And what you did was running special segment you specialised in within your studies, there at Sheffield?

Alex Schlich 02:08

Something you know, you always remember teachers or professors and different times, and I remember an American professor I had there called Professor Jacobs. And he taught marketing and he talked about entrepreneurship. And he also was an entrepreneur himself. He ran his own chain of stores, it was called Bumps and Boobs, it was a sort of lingerie for the larger woman in and around the Sheffield area had a number of stores, Sheffield, Rotherham, etc. And I remember he talked about innovations. And he said one of his best innovations that he had, he put in a chair and a Daily Mail into his shops. And he said that actually managed to keep his customers in the shops for a lot longer.

Because the wife would come around with a husband, he would sit down on the chair, read the newspaper while she was happily choosing her items. And it was also a lesson really, that's innovations can really be quite simple. But they can make a really big difference to the performance of a business. He had a number of, you know, very useful tips at the time about trying to keep things simple and doing simple things really, really well. And that can have a really big impact on the performance of a business.

Peter Higgins 03:15

That's absolutely brilliant. I love that. And now we see chairs, sofas, in almost every retail outlet, large retail outlet don't make where usually the men are given it. Yeah, go on you go and do you want to do you know, crack on with the shopping. So yeah, thank you very much for that. I love that idea. And innovation being kept simple is very important. Now, I want to talk about your journey into the fund management and wealth management industry. You started your career as a trainee fund manager, Alex in 1991, with Newton investment management, and you were then promoted to being a fund manager prior to your 25th birthday, right.

So fast, fast tracked, please share with us how you felt when you first landed your amazing role as a training and also what tasks you were given as a junior fund manager?

Alex Schlich 04:01

Well, it was quite an interesting sort of step up really because I left university I went travelling for a year and I came back and I wanted to find a job actually ended up working for a local business first called Hertford and Plant and Machinery which basically sold second-hand plant and container handling equipment to ports around the world. Actually, it was a good it was a local business very small.

There was only a team of four of us there, getting good experience working with the manager and owner of that business. But we had some significant sales going out to the Far East or the Middle East at the time of the first Gulf War. And all those sales were basically cancelled because it was impossible to get insurance for the transportation of those floating docks as they were. So I was actually then made redundant in early ‘91.

I thought now it was a kick that I needed to go into the city. I'd also wanted to work in the city. And actually one of my old classmates at Sheffield was working for a recruitment company so I can gave him a call. And he said, look, there's an opportunity to join a very young Investment Company, Newton Investment Management. And at the time when I joined, it was number number 70, or 73, in terms of the staff list.

So I joined Newton, who was founded by Stuart Newton, but also has some very impressive, I guess, fund managers there. And the guy that I first worked for was a guy called Robert Shelton.

He was from Yorkshire, he'd trained as an accountant. So as you can imagine, he was particularly interested in how much cash there was. He was also interested in who was generating the cash, how it was generated. And he also was the first guy to sort of point me towards the balance sheet rather than the P&L. And I've never forgotten that, you know, he was always talking about, well, how much cash are they got on the balance sheet, what's the change over the year, let's try and understand how much cash they're actually making. Not necessarily what they're saying in the P&L, but let's have a look at the cash position. He was my guess, first mentor, when I started off, he was also one of the interesting things he got me to do back then I had to buy currencies, we had multiple currencies, back then it was before the time of the euro, and I had to buy Italian Lira. And as you can imagine, one Pound to 2,000 Lira, there were lots of notes on calculations that we have to buy. And he stressed to me and again,

I've learned this and remembered ever since the importance of checking your data, checking the numbers, going through it again, and then doing some sort of sense check. I mean, if you had sort of 2% of the billion of assets being bought, that would be 20 million but in Italian Lira, that would be 40 billion Lira 10 naughts, it's easy to make a mistake. And, you know, Rob really taught me to check through the numbers, check them again, to make sure they're right better to spend a bit more time at the start, rather than end up buying the wrong amount. So yeah, he was a certainly a good person to work for and gave me some of the foundations of mind sort of a, I guess the thing that I use now in terms of how I invest.

Peter Higgins 06:57

Brilliant, you covered two of my questions there a what your roles were be what your who your mentor was, as well, with regards to Rob, and you said about your approach to learning. When you went in there as a trainee, thinking about all the people that aspire to become fund managers is obviously quite daunting going into large industry into a large company as a 20 odd year old.

What do you remember back then, as a youngster going in that you think crikey! If I knew then what I know now I would, how would that make a massive difference for you?

Alex Schlich 07:25

I just remember joining a young company full of lots of young, ambitious people wanting to do really well, alongside in a number of very talented individuals that wanted to drive the business forward. And that's not just from Stewart Newton, who lead the business. But that said, there are other former managers there as well.

Rob Shelton, Richard Horlick, people that have been around the city for a long period of time, who were great mentors, I think, you know, one of the things that I still remember is, sometimes it's just worth having a go. Don't necessarily be scared of failure. You know, you can learn from your failures. But sometimes it's worth just having a go and trying to do your best basically. And that I think Newton was a good environment for doing that.

Peter Higgins 08:04

Love that reply. Now, whilst you were fund management, Newton, tell us about your best experience whilst you were there. And something that you remember thinking, wow, that was just amazing. I can't believe that happened whilst I was there?

Alex Schlich 08:14

I know there were lots of very good experiences. And I came away from Newton with some fantastic friends that I'm still friends with today. And I think that's something I really did keep with me, the guys, right across the firm ,I'm still friendly with sort of five or six of them today, we still meet up regularly and talk about stocks and joke and do other things. I mean, one of my first fund manager, a couple of fund management experiences that was just incredibly enjoyable.

One was we were big shareholders in a small company. And someone asked me to attend the shareholder meeting with their top four shareholders. And I was probably in the first six months there. And we went to a house on Chain Walk in Chelsea, it was was, I think, originally one of the Guinness family’s entertaining locations or entertaining residences in London. And as the chairman of the company, the chief exec and the three major shareholders, which we were one I didn't know a lot about it, and we were treated to a fantastic meal. And I remember afterwards, we retired to the smoking room for cigars. And I've never had a cigar before. And it was all just like very surreal experience for a young guy coming up and sort of experiencing things for the first time.

So that was pretty special experiences back then. I'm not sure it happens too often these days. But for me, that was something I remember, but it is generally the friendships that we learned, you know, on the job and after work, which are still with me now.

Peter Higgins 09:36

Alex, you took a bit of time out and you went away to America to do some academia, MBA Masters in Management Degree. Why did you choose to go and do that MBA in America? Or was it just placed across America?

Alex Schlich 09:49

No I spent, I spent two years at the Kellogg Graduate School of Management in Evanston just outside Chicago. And funnily enough, I'd always wanted to do an MBA. I've I found a piece of paper from my school the other day that from the graduate the careers officer who said, well, if you do want to go to the do an MBA, you've got to do it in America, because that's where the best schools are. And back then I think they're the best MBA schools were in America, I decided I wanted to try and get myself into the best place I could do.

Kellogg was ranked number one in terms of the top graduate school then I actually met a number of MBA graduates in London at the time, a number of Americans who I came across has been incredibly friendly, very welcoming, and just really encouraging me to, again to apply to the best schools and I did.

I applied to five schools in the States, I was offered a place at Kellogg, along with a couple of others would have said that at the time, Kellogg was a top ranked business school. And so I decided to go there and I had an absolute brilliant time, the Americans were incredibly friendly, very welcoming, and the location of Kellogg, which is on the shores of Lake Michigan, just north of Chicago, is a brilliant place.

Peter Higgins 10:56

Brilliant. Now, I love the fact that you travel and give you some other cultural experiences other than Sheffield, the grim north, as we call it, you know, I'm not far away from there, where I was brought up in Oldham.

Alex Schlich 11:05

Sheffield was a lot of fun, too, but it certainly wasn't Evanston or, you know, wasn't America.

Peter Higgins 11:10

Absolutely. So it's nice to have that diversity. Now, Alex, you then returned, and you took some other jobs, but then obviously, eventually, you've drawn back into the investment industry. So just want to talk about the experiences during that time. And then we're going to talk about about Yellowstone. So tell us about that for us, please.

Alex Schlich 11:28

Yeah, I came back, I work for a consulting firm marikon, which was there's a bit of a theme for some of the companies that work for which is really about focus on returns, not necessarily profitability.

But, you know, actually cashflow returns and marikon had a concept called economic profit. And that basically measures the takes into account the capital that's required to generate profits in a business. That was a really good experience for me, but I wanted to get into a more entrepreneurial environment was a time of the dotcom boom. And I joined actually, first a company called Gradunet, which was an online graduate recruiter, one of the first online businesses out there. unbelievable experience.

You know, we took the team from a team of four to a team of 20 in the space of 12 months. But actually the dot com boom was beginning to crash a bit, we found it more difficult to raise funds. And actually, the experience I had was that it was really important for me to be selling at the time. Because actually, without selling, it meant that we didn't have enough revenues, we had to make someone redundant. So it gave me a great experience in selling and the courage to take rejection and ability to build up my own resilience. I knew that at that time, if I didn't sell something that week we could have to make someone redundant at the end of the week, we did four to 20. And then we went back down to four people. And so I needed to exit that. And that was when I joined Colin Stewart, which was a young broker. It hadn't been around for too long.

It came out of Singer and Friedlander and I joined Colin Stewart in 2001, I joined what was called their quest desk. And Quest was a product that was set up by Terry Smith. It models something called Cash Flow return on invested capital. And again, it took into account the capital that was required in order to generate the profits of the business and how long that capital could be useful.

Yeah, that quest product was a brilliant product back then. I know the guys on the team. Now it's still a brilliant product. Now, as I said, it looks more than just at the p&l. It looks at the cash flow generated from the businesses, Colin Stewart, which was then later taken over by Canaccord for around about 12-13 years.

I started off on the quest desk, you know, work there, understanding how that model works, understanding how you could interpret the data and use that to help make recommendations on companies, Quest used to run a lot of screens to try and you know, screen the markets, which companies would fit various criteria, and one of their best screens. And I know they ran it again recently with something called the LBO free cash flow screen, which sort of looked like a normalised level of profits, took into account a normalised capital expenditure. And then looked at the LBO free cash flow yields. And identified I remember the first time he came across, it was back in 2003, did a brilliant job of identifying companies that might get taken over because actually, they have a good long term track record of generating solid cash flows. And they potentially the share price might be depressed at that time, or the cash flows may be temporarily depressed or for short term reasons.

I said, I think they ran that screen again. I know they run it regularly. I think it was quoted in The Times a few weeks back, but has done a phenomenal job over time of identifying companies that might get taken over because actually, you know, they are looking particularly attractive based on their long term cash flow generating potential.

So, I was at Colin Stewart for 12-13 years and started off in the Quest desk and then moved on to sales and then ended up running the UK sales team.

Peter Higgins 14:53

Brilliant. I love that. If I may just go back on two points there is you subtly mentioned but didn't really expand very much On the fact you're working with Terry Smith, there's only one Terry Smith in the investment industry, as I'm assuming it's the same one. Tell us about that experience working with and alongside him?

Alex Schlich 15:08

Yeah I mean, Terry is one of the brightest people that I've ever worked with. You know, he combines raw horsepower with an incredible ability to focus on the important parts of an investment decision. He's a hard taskmaster, he's got incredibly high standards. But again, you know, you work alongside very talented people, you learn an awful lot from them. And I said, you know, Terry, was instrumental in developing this Quest product, which focused on cashflow returns. And I think he's always himself been focused on that.

And you can see now in the way he manages his money for Fundsmith, he looks for companies, he used to talk about it back then look for companies that can generate higher returns on invested capital, and can invest their invested capital and grow over time. And those companies we call compounders, Nick Lindsell and Michael Train, they use that same sort of approach as well looking for high quality, high return companies that can grow the capital base. So those are really good companies, not just companies that can be their cost of capital, that you can create the cost of capital, and grow that over time. It's a pretty good formula for success. Now, often, those companies look quite expensive, but they tend to, I guess, they beat the fade. Most companies fade to a norm over time, and you're looking for companies that you think might be able to just beat that fade. Working with Terry was an experience.

Peter Higgins 16:21

Love that response. Now, the second aspect I wanted to touch on was the importance of cash flow and being able to generate customer continue to generate cash flow despite different headwinds. And you touched also regarding back so when you were at uni, your professor was saying to you about looking at the balance sheet, two core components, which investors seem to overlook the importance of can you just stress a little bit more about the importance of cash flow and balance sheet for us, please?

Alex Schlich 16:45

Well, I guess a lot of companies, I will to generate profits when an accounting profit doesn't necessarily take into account, not the same thing as a cash profit. And accounting profit might take off depreciation, there may be some development expenditure, which is expensed, which obviously is cash for the company that's going out of the business. But again, the company could be actually quite cash negative, but look like it's a profitable company. So I think you just need to combine the two basically, to understand and actually investing is good, you need to understand that actually, the money is going out now. And the returns might not come in for two or three years.

So it's not to suggest that you shouldn't invest and develop but just to understand that, while you're doing that, there may be a mismatch between the profits reported and the cash that's actually generated. And, you know, looking at the balance sheet gives you an understanding of the capital that's required to generate those profits, the state of the cash, and what's happening to working capital. And as I said, you know, from Rob Shelton at Newton, and through Terry Smith and others, they've always had a good focus on those components, which I think are a key part of making good investment decisions.

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Peter Higgins 18:10

Now from Canaccord Genuity, to Sanlam Four, I want to ask you, Alex to share with our listeners, your investing style as a fund manager and how that differs, and how your investing style was being measured as a fund manager?

Alex Schlich 18:24

We were running UK funds, they were sort of all part of the I guess, UK all company sector, I think our style, we were very much bottom up stock pickers, it was a team based approach.

So there are three fund managers there that made the decisions. And we made them collectively needed two out of the three fund managers to make those decisions. I'm not entirely sure that a team based approach works. I think, when things are going well, team based approach works fine.

But things are going badly with individual stocks, it's sometimes difficult to actually make the decisions to cut a position. And to admit that that's your investment thesis hasn't turned out as planned, where we tended to look, as I said, bottom up stock picking approach looking for undervalued opportunities relative to their prospects, in our view, that that was the approach that we took.

Peter Higgins 19:13

I love that thank you very much. Now, how does your current role and also being a private investor differ to how you invest now, compared to when you're a fund manager?

Alex Schlich 19:26

As a fund manager, you have to report either monthly or quarterly to your client. And therefore, you take a lot longer making your decisions because you know, if you purchase something, it's going to be in the portfolio for a long period of time because you can't chop and change because you can't go to quarterly meeting with a client and justify why you bought something. And then reverse engines, you know, a month or two later. I think as a private investor, it's much easier to make quicker decisions to change your mind. Decide you haven't done the right thing, if you want to and I think I have I know that's not everyone's style, but I'll buy something and I may then sell it a month later if I don't think it's working out.

So I can take much shorter, I guess, time periods. Now, I think the other thing is in terms of, and it's particularly relevant now there's liquidity in the market, I think is really, really difficult. So as a fund manager, you know, you are really restricted to the size of market cap that you can go down to, you know, we found it probably difficult to buy things under sort of 500 million, we had a couple of stocks below that. But liquidity is very difficult in this sort of small and mid cap, well, when you've got, you know, reasonable sums that you're playing with now, as a private investor, it's much easier to go down to stocks that are 10-20, 30 million, because you can just take a, you know, a small position size in that.

And that makes a big difference of being a private investor being able to participate in a smaller company as well, which I think is increasingly dominated by retail investors simply because large institutions are withdrawing from smaller companies areas, and they certainly finding it more difficult with the lack of liquidity to actually build up the position sizes that they want to have, and will actually make a difference to the overall performance of their portfolio.

Peter Higgins 21:01

Brilliant reply, love that. Now, you moved on, you set up your own shop, as they call it. You're the founder and managing director of Yellowstone advisory. So tell us about the role that you play in the market, and how you are helping with the communication with the retail investors?

Alex Schlich 21:17

So you know, and I founded Yellowstone advisory back in 2017. It's an investor relations and corporate advisory business, we help listed companies with their investor communication, helping them refine the investment messaging, and then helping them communicate that investment messaging to both institutional investors and retail investors.

We work with a number of retain clients, and we work with other clients on a one off project basis, we thought that the retail investor base was an important one to try and connect with, particularly for smaller companies.

So more recently, I guess, since probably the last two or three years, we've been running either face to face events before the pandemic connecting smaller companies with retail investors, as well as you know, running webinars for listed companies to connect with retail investors giving them an opportunity to get across their investment story, and also giving retail investors an opportunity to ask their questions.

I know a lot of retail investors often find that they get overlooked or ignored by listed companies. And this is a great way for them to have their questions answered by the people who are running the businesses potentially running money for them.

Peter Higgins 22:26

I think it's brilliant, what you do and I've been, I've had the pleasure of being invited to a few of those events face to face and also on on the online seminars, because you've got some blue chips. You've not mentioned any names or you've been a bit coy, Alex, some blue chip names. You go to those AGM, so you go to their events. Without the availability of doing it via Yellowstone, you'd never get the opportunity to ask a question to the CEO or the CFO.

So I think it's fantastic. You're doing that. Please share with us some of the blue chip and FTSE and AIM clients you're currently working with please?

Alex Schlich 22:56

So yeah, we've got a number of events that we've organised. We had one this week for Halma, which is a really high quality company consistently again, generating returns above its cost of capital and growing the capital base and Charles King, the head of investor relations, there has always been a keen supporter of Yellowstone and indeed getting the message out to retail investors. In addition to Halma we've done work for the likes of Rotork.

We've actually got a webinar with Rotork coming up in about six weeks’ time, again, a high quality British engineering company, but other companies like you know, Lloyds Bank, Sainsbury's, some of the smaller companies, like Kenmare, Checkit, Oxford biodynamics.

So a whole host of different companies that we've run webinars for in the past and going forward. And all of those are interested in getting the message out to retail investors and helping spread the word that they are also listening to retail investors and want to get their feedback and understand what they like and don't like about their companies.

Peter Higgins 23:53

Yeah, I think it's really good that you're doing that work. And that's what we're trying to do here on the Investing Matters Podcast to try and educate and inform our listeners. Now, Alex, I know you've got similar to myself have passion for innovative small companies, how do you filter down from the vast number of companies that are out there? So the one or two that you go, I'm going to put somebody in that one there?

Alex Schlich 24:14

I think that's just a very difficult question. Or maybe the answer is I don't have a clear process for that process. I mean, you look at a lot of companies, and sometimes some of them catch your attention, you really want to do some more work on them, that you obviously also have to accept, you'll probably miss a lot of opportunities. And I think that's a good thing as well.

You can't expect to find every good opportunity or find everything that's out there. I think when I come across something that's interesting, it's either because a friend has mentioned it to me or I've read about it and it seems to fit a trend that I think is becoming important. I just ended up doing some more work on it and spending the time to understand the company a bit more.

Understand the valuation try and if I can understand the people, and actually these days, you know, go online and look at the original have documentation, read the report and accounts. But I think the actual filtering process is quite difficult. I mean, I have a number of screens that I set up for different purposes, I don't think they've necessarily really highlighted, particularly smaller companies that might be changing or smaller growth companies, those have really come up by discussions with fellow investors.

And for whatever reason, we think they might be quite interesting and then going and then doing further work on them to find out if indeed, there might be an opportunity to invest in them, because they do have some attractive products growing in a particularly attractive way, or there's a valuation gap, which looks particularly attractive.

Peter Higgins 25:37

Thank you for that reply. Now, Alex, once you've identified that company, and you want to put the money down, do you tend to scale i to position size that you want? Or do you just go that say, I'm going to put X amount in and make a purchase on a lump?

Alex Schlich 25:50

No, I always scale in over a period of time, I think it's very difficult to know exactly the right time to be buying a stock or exactly when you pick the bottom or pick the right time to be purchasing it. So depending on how much I like it, I will try and buy it over a period of weeks or indeed months. And actually, there are some stocks, I guess I bought over a period of years, it's a question of sometimes really liking the idea, but maybe not having quite the confidence to build a full position. So buying a little bit first, waiting for the results to come through waiting for the update. This suggests they are delivering on what they said they were going to do. And then adding to the position. Yeah, that's what I do. I'd, I'd like to buy it over time. And I'd like to buy it as my confidence improves, as they continue to report good or better results. And we're expecting.

Peter Higgins 26:33

Thank you. Now, Alex, lots of books written on how to invest where to invest when the mentors quality shares, invest in psychology, even macro-economics, yet very few books are written expressing education on and for investors on when to sell, given your 30 years’ experience, what indicators or nuggets are you looking for in the noise that's out there regarding stocks and companies that say to actually Alex might be time to top slice or move on regarding a company? Regarding your own personal investments?

Alex Schlich 27:07

Well, I think there are a couple of things are there. One is position size, which is sometimes a position gets so large in your portfolio. And obviously, that's a good thing, because the stocks have gone up that you might think I don't want to have that amount of exposure to that particular company, I love that company, it's done really well for me. But if I want to have a cap on my position size, when it gets there, I might want to take some money off the table, run your winners cut your losers, but I don't always do that. Because it's hard sometimes to cut your losers because you think you know, something that someone else does, and actually shouldn't really be down there. But you know, I think in principle, it's a good thing to do. And I remember dealing with some traders early in my career, and they had a phenomenal record on just cutting losers.

Basically, it's a discipline that I suspect very good traders have. In fact, I know very good traders have that discipline of cutting losers, I like to look about what's happening at the operating level, if a company is still performing well, and still doing what they said they would do, I may well see a falling share price as a chance to add. And as I said, I don't buy my full position right at the start, I may see the fall in share price as a chance to add. But my main reasons for selling I think are if the investment thesis hasn't panned out, if the company has actually had a hiccup and things aren't going as well as we thought they were going to do when we made the investment in the first place.

Or indeed, if it gets to a level where in my portfolio that the size of the position is I guess too large against my risk parameters. That was the set, that's a good thing to happen, because it means the shares have done really well. So I don't mind that happening. But I do tend to try and run my winners, you know, cut the losers.

Peter Higgins 28:39

Brilliant. I love that. Now notice it in the conversation that we've had previously, that I support, and you support quite a number of charities were very good at paying it forward. As such. I want to talk about that briefly, the ones that you're interested in. Also note that you're also supporting a Ukrainian family. So I want you to talk about that as well Alex, to share some of that first please.

Alex Schlich 28:59

So yeah, now our start, we have a Ukrainian family staying with us at the moment. It's a mum and two young daughters, six and nine. We didn't think about it for too long. We talked about it as a family.

We wanted our children to be supportive. We've got older children, one who's left university, and she's been absolutely brilliant, because her room has been used by the Ukrainian family. But she didn't hesitate to say, yes, that would be great. They could use her room. And then I guess my son's had to adopt a slightly different setup. In the house. He's in the sixth form. We didn't want to upset his studies. But again, he's been fully supportive. And you know, we decided to do this together.

My wife and I and the family and actually is my wife has been an absolute star. She's helped me out for almost a dozen families find host families here in the UK, completed many, many visa applications and all the other Universal Credit and other form fillings, you know that the government requires so she has really been the absolute star. And she just sort of very methodically gets on doing these things and you know having this family with us. It's been a it's been a good experience. They've been with us for about two months. We do some things together, we do things separately, we, you know, we'll eat together, though even some Ukrainian food, things like Boscht and different salads that we wouldn't have. And you know, it's been quite wonderful to see two young children play on my wife's old swing, which is now 60 years old, and I've reassembled it in the garden and hearing the laughter from Kids playing there has been good.

That's probably been one of the best thing, hearing sort of happy chatter, laughing kids in the gardens that has been good. So, you know, Ukrainian experience has been very successful so far. And we've really enjoyed that. I think the charities that I've tended to support have been sort of education type charities, believing that giving everyone a good education is an excellent opportunity, either individually, we've supported a number of education charities, and also, I guess, reported a number of African charities which target to help people grow themselves out of poverty.

One of them has been Build Africa where they build schools in Uganda and Kenya. Those are the sorts of charities that we've supported over the years.

Peter Higgins 31:07

That's brilliant. I love the fact you've reassembled your wife's swing from what she had sixty years ago. That's fantastic. Fantastic to have in the family, sixty years, I should say not that your wife is sixty years of age.

Alex Schlich 31:18

Yeah, well, it tells you how well built it was to simple a frame swing, and so that over 60 years old now and it was reassembled, it's used by our kids, my wife when she was a child, and now a new set of a new younger family are using it, which is quite nice.

Peter Higgins 31:33

Brilliant. Now, I'm interested here, because it says that you're playing cricket coaching and watching I want to hear about the coaching side of it, the size of the team, what you're learning from actually coaching, because I think sometimes when you're doing something, you'll learn more about the sport as well.

Alex Schlich 31:49

Yeah, I think my actually my coaching days have just come to the end because my son stopped playing colts cricket, and he's into adults cricket. So I don't know anymore. But I have been coaching for the last probably 10 years actually. And you know, when they start playing any sport at sort of age five or six, they have a tremendous ability to learn things, and they make unbelievable progress. So that's a satisfying thing about coaching. And so yeah, I've been coaching cricket, I'm not really a great cricketer, but I love the game.

My dad introduced it to me when I was younger, and I remember going to see my first match in the World Cup final between West Indies and, and India. And that gave me the passion for cricket. And so yeah, I love coaching. I play also for a local dads’ team. And we play some midweek, sort of 20-20 matches. And of course, I like watching it as well. So yeah, all aspects of that. But you know, the coaching is an area where, as I said, you can give them some drills to do, you can give them some techniques, some will pick it up quicker than others. But you know, you look at the start of the season, and then you move to the end of the season, you will see progress across all of the children that have been in your group. And it's just a great feeling to see the progress that people make.

Peter Higgins 32:57

Now, Alex has been on this call a little while. So I'm going to conclude our interview here with one final question. As a former fund manager, as a private investor, what's been your greatest learning? And what nuggets would you share for any investor to say, this is what you should be doing as an investor to be successful, long term?

Alex Schlich 33:17

One of my great investing friend of mine, one of my great friends with a guy that I met at Newton called Nick Moss, a good friend of mine, and a very good investor, and I talk ideas with him all the time.

Now, he's very big on trends. And I think sometimes that's quite a good thing as a point in the right direction to think about what trends are happening, what trends are going to be relevant going forward. He was one of the first guys that picked up for me on the sustainability trend, you know, we ended up buying impacts that asset management over 10-15 years ago, I would suggest, you know, there are lots of pieces of information out there, if you can think you can pick up some useful trends. And I think sustainability is one of them, whether it's going to be solar battery storage, smart metering, electric charging hydrogen or fuel cells, to think about what trends you think would be relevant going forward, and what companies you think might be relevant playing some of those trends.

And the other thing I would say as well, which is come back to the cash component, the cash flow, and we talked about earlier, that's a really important part of investing, trying to understand how the company is generating cash, do they have the opportunity to grow the cash generation characteristics? And is that a company you think you'd be happy owning in 5-10 years’ time, and that's the starting point for thinking about whether that's a useful investment or something you might want to invest in and do some more work in?

Peter Higgins 34:36

Brilliant, I love that. Alex has been an absolute pleasure speaking with you mate. I'm looking forward to seeing you soon. And give my love to your good wife. And thank you ever so much for putting out and giving some kindness to everybody. And also the Ukrainian family out there as well with you. That was Alex Schlich, the founder and managing director of Yellowstone advisory Alex take care mate take care God bless.

Alex Schlich 34:58

Wonderful. Thank you very much. Peter, thank you for having me this morning and really appreciate being with you on this podcast.

Peter Higgins 35:04

Very welcome Sir.

LSE 35:05

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