Episode 83: Meet Judith MacKenzie - Founder of Downing Fund Managers, the boutique investment arm of $2.5B Downing LLP

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Judith MacKenzie’s path is as unconventional as it is inspiring. She didn’t learn to invest on Wall Street. 

The lessons that led her to the founder’s seat, running the boutique investment arm of $2.5B Downing LLP, started in her dad’s small news and ice cream shop in the Highlands long before finance was on her radar.

In this Episode, she sits down with Stacy to discuss: 

• Her backstory– the surprising business lessons she learned as a kid and how they still influence her investing today

• Why qualitative research is just as rigorous as the numbers and how to test a company’s integrity

• The biggest red flags in management and governance that investors often miss

• How to stay true to your strategy when the market pressures you to pivot

• What it’s like to be the only woman in the room and what needs to change for the next generation of women in finance

More about Judith MacKenzie:

Judith is passionate about investing in UK smaller companies and has spent 30 years immersed in the investment world, firstly as a technology analyst and then as a fund manager. She is Chair of the small and mid-cap lobbying body, the Quoted Companies Alliance, and has experience as a board member in both private and public companies.  With a value-oriented investment style, Judith has driven investment returns in excess of the industry benchmarks. Hailing from the Scottish Highlands, Judith spends her spare time in the hills with her dogs or trying not to fall off horses.

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TRANSCRIPT

Below is an AI-generated transcript and therefore it may contain errors. 

[00:00:00] Judith Mackenzie: I think investors can be, or should be, innovative, think differently, sorry. And, be allowed not to have to go down that route of, being formulaic. And, actually, it's made me really passionate about educating, people in school, and, coming through the universities that might not be the blue chip universities, that they can be fund managers.

[00:00:20] Because, you know, if I could do it from a backwater in the Highlands, then surely anyone can do

[00:00:25] Stacy Havener: Hey, my name is Stacy Havener. I'm obsessed with startups, stories, and sales. Storytelling has fueled my success as a female founder in the toughest boys club, Wall Street. I've raised over 8 billion that has led to 30 billion in follow on assets for investment boutiques. You could say against the odds.

[00:00:46] Yeah. I share stories of the people behind the portfolios while teaching you how to use story to shape outcomes. It's real talk here. Money, [00:01:00] authenticity, growth, setbacks, sales and marketing are all topics we discuss. Think of this as the capital raising class you wish you had in college, mixed with happy hour.

[00:01:11] Pull up a seat, grab your notebook, and get ready to be inspired and challenged while you learn. This is the Billion Dollar Backstory Podcast.

[00:01:23] Our backstories have threads, through lines that start in our formative early years and pull forward to our today. I love that about backstories. When someone shares a glimpse of their childhood and you see how their experience led them to be exactly where they are, where they are meant to be. Even if on paper, it doesn't make sense.

[00:01:49] Today's guest has that kind of backstory. Meet Judith McKenzie, the founder of Downing Fund Managers, a billion plus boutique investment arm [00:02:00] within Downing LLP. Judith is a talented investor, a fund manager, and a founder. And her path to become all of that starts in a small town in the Scottish Highlands, where her dad had a business selling newspapers and Ice cream.

[00:02:18] It doesn't make sense, and yet it will make all the sense in the world once you meet her. Without further ado, let's dive in. Meet my friend, Judith. Judith, thank you so much for joining us this morning. This is a joy for me because we share some friends who are huge fans of yours, and this is the first time we're getting a chance to talk, and I love that we're doing it on the podcast so other people can hear.

[00:02:44] Can be flies on the wall for this conversation. So thank you for being here.

[00:02:48] Judith Mackenzie: Not at all. Looking forward to it

[00:02:50] Stacy Havener: Okay, so we start at the beginning my favorite thing which is The backstory of the people who are on the show and I would love to hear [00:03:00] yours So take us go as far back as you want. Let's talk about your journey to you know sitting In the chair you're in today.

[00:03:08] Judith Mackenzie: Oh, this is quite indulgent, isn't it? Yes,

[00:03:10] Stacy Havener: it's

[00:03:10] Judith Mackenzie: fun. So i'm a uk small cap fund manager I'm a value manager And i'm also part of a boutique called downing and part of the management of that boutique. So How yeah, how did I get here? So I want to go probably right back right back to the the very beginning actually, not because I'm being indulgent, but because I think it's relevant to how I've, I suppose I'm here and I'm not going to give you my CV because I think when people start writing more CVs and, you know, saying I worked here, I worked there and, uh, University because that's not actually what formed what I think about and what I do now.

[00:03:53] So I grew up, I grew up and I now actually live. Part time in London, part time in the Highlands of Scotland, [00:04:00] so if, I know that you're on the other side of the water But if you, if you think of Loch Ness, or if you've ever heard of Loch Ness, it's actually north of Loch Ness so I grew up in a very, very, very small community and my, going out my back door, it was lochs and hills and whatever and I think There's a lot about growing up in a quite a remote community that, that makes you, I don't know, that word resilience, maybe not a good one, but it does make you a little bit resilient because I suppose you have to find, as a kid you have to find your own fun to a certain extent, but the next part I think was quite formative.

[00:04:34] My, um, my parents Ran a couple of businesses, retail businesses, in the local, um, village, quite a small local village. And I think I learned what Boutique was about then, and it's really weird to say this yet, but they, there's nothing glamorous about it, but they ran newsagents, so they sold daily newspapers.

[00:04:54] Mm hmm. But it wasn't, because it was a small village, they pretty much did everything. There was a little bit of tourism [00:05:00] that came through as well. So, my father was a complete entrepreneur, and he, um, he was When it came to boutique, I think he tried to find the strangest way of being boutique. So, bearing in mind that we're in the Northern Highlands, hundreds of miles away from Glasgow or Edinburgh, about 900 miles away from London, and hours and hours away by train or by car, he went off to Italy and, uh, sounds crazy, he bought An ice cream machine from Italy and he imported it and he started making, in fact I had to work there, uh, he started making this amazing Italian ice cream, importing all the, um, all the ingredients and we had this ice cream machine that people would travel miles for.

[00:05:45] So all of a sudden this little news agent that sold newspapers was selling some of the best ice cream for hundreds of miles around. He then branched into, um, He probably had the best, uh, publications, uh, local [00:06:00] publications and international publications. He was selling the New York Journal, where nobody else in the UK had a New York Journal.

[00:06:06] And then they had a fantastic toy range. So, for a small newsagent, he was doing something that was quite, my mother and him were doing something that was quite boutique and quite unique. And I supposed, well, I had to work in the shop. I hated it, if I'm being honest. Don't ask me to serve ice cream to you.

[00:06:25] Um, but what I realized was that, or what he taught me was that having that kind of boutique nature attracted people, um, meant you weren't just me too, but you could probably have a slightly higher margin. So I started to learn about business and cash. And margins and, and even at a young age, I think I was like, yeah, this is really cool.

[00:06:48] And I realized that you can make money out of it, but it could also be quite a bit of a crowd pleaser because people would come to you and you get a brand for yourself and you become quite well known. So that [00:07:00] in the formative years has Almost sort of transcribes itself into what I believe in terms of investing and maybe just trying to make that link So my my father was selling newspapers.

[00:07:11] We sold what was called the financial times and My dad said to me you can have any publication You want on a weekly basis, what one do you want? And I picked up this rather attractive pink paper that I thought was different to all the rest. I had no idea about finance, but yeah. And then he said, well, why are you picking that up instead of a glossy magazine or whatever?

[00:07:30] I must've been about 12. And then he started talking about stocks and shares and how he'd been interested in them and how it related back to the business that he was running. And I thought it was fascinating because I could relate what we were doing. In the shop in the small business to what I was reading about a company that was operating out of London and then I saw I could see the stock prices and I could see that sometimes it went up and then sometimes it went down And then I realized that actually you were buying part of a business not just buying a share You're [00:08:00] actually buying part of the business So that's when I got captivated and it probably made me really focused on what I wanted to do.

[00:08:08] I wanted to be An investor in, in companies. At that point, I didn't know about being a value investor. I didn't know about smaller companies, but that really paved the way for my journey into going off to, um, taking my bag, getting on the train and going off to the big city to, to learn how to, to make investments and that that was the start of it.

[00:08:29] And I'm really quite, much more formative than anything I learned at school and certainly anything I learned at university. I read economics and accountancy, but that was just a passport really into learning how to write a letter to a stockbroker and saying, can I get a job when I'm, I think it was 21 at that point.

[00:08:46] And I managed to blag my way in. So that, that really was the start. And it's, but yeah, it's been, it's, I, I would never have been bright enough or intelligent enough to get or go through the formal route, [00:09:00] um, that sadly some people have to do now, and that is to go down the university route, uh, then going in as interns and, you know, being bashed into being, an investor, which I don't think is the right thing to do for people.

[00:09:13] I think investors can be, or should be, innovative, think differently, sorry. And, and be allowed not to have to go down that route of, being formulaic. And, actually, it's made me really passionate about educating, people in school, and, coming through the universities that might not be the, the blue chip universities, that they can be fund managers.

[00:09:35] Because, you know, if I could do it from a backwater in the Highlands, then surely anyone can do it.

[00:09:40] Stacy Havener: I mean, this is so Wonderful. Also, from ice cream to investing. I mean, this just epic. What I love as you were talking, I mean, this story is, is magical and I want to, I want to unpack some things here, but one of the things that really jumped out to me was the way you used [00:10:00] the word boutique.

[00:10:01] And actually it was almost like a replacement for different or special. It was not a synonym for small, even though I think that's the general perception of boutique. I think you can be a large company. You could be a listed company and still be boutique. You could be an asset manager and, and run a lot of money and still be boutique.

[00:10:25] And so I wonder, is that, is that something that you think about intentionally? Like boutique means different boutique means special.

[00:10:34] Judith Mackenzie: Yeah, it does, actually. Now, now you say it. I don't, I never relate it to size. Yeah. I think, yeah, and size is not the obsession about it. It's about doing something that's different.

[00:10:43] It's true to what you say and, you know, it's genuine. So, um, I don't, it's very difficult to do that in larger houses, I think.

[00:10:52] Stacy Havener: Yeah, I think

[00:10:52] Judith Mackenzie: so. I think you, you can get, you, so larger houses do make you kind of push into one direction. [00:11:00] So, when you do get larger, and dining, when I joined dining, we were 17 people.

[00:11:04] So we're now 250. So from a culture point of view, it's, that's been a challenge in its own right, because we still want to keep the boutique doing something different, um, be individual, um, offering investors something that are, you know, you're, you're giving them clear returns for what, what they're investing in.

[00:11:24] So, uh, and not being homogeneous, not being one large fund that does everything

[00:11:30] Stacy Havener: right.

[00:11:31] Judith Mackenzie: So I It's it's difficult to do as you get larger, but it's not impossible.

[00:11:35] Stacy Havener: I think so Yeah, and I think and we're going to come back to your story But this is such a great point that I really want our listeners to hear Because i've had clients where you say oh, you know, we work with investment boutiques and they think it's almost like a bad word It's like, I'm not a boutique.

[00:11:51] I don't want to be a boutique. You're like, well, why? What, what does that mean to you? And then they think small. Now I so agree that there is a natural [00:12:00] capacity on being able to deliver something special and different. And unique. And you have to be willing to respect those natural sort of boundaries. And if you push them or you break through them, it takes you to a different place, right?

[00:12:16] But I just loved that boutique was meaning different and that boutique was meaning small. I want to go back to your story for a second, because You alluded to the fact that as an investor, you were drawn to smaller companies, more boutique, more different, more unique, but in addition to that, you also wear a hat as sort of an entrepreneur as well.

[00:12:40] And so when did that happen? Or did you always know that you wanted to add that hat to the mix? Or was that how did that come to be?

[00:12:48] Judith Mackenzie: Oh, Yeah. So, so I, if I could, if I do go back to the CV just for a second. So,

[00:12:54] Stacy Havener: yeah, I

[00:12:54] Judith Mackenzie: started off as a stock or stock broker analyst for a couple of years. Um, [00:13:00] then I moved in to be an analyst within an institutional firm

[00:13:04] Stacy Havener: and

[00:13:05] Judith Mackenzie: that institutional firm was servicing smaller companies.

[00:13:08] So I suppose I was naturally drawn towards smaller companies. And why is that? I think you get far more of an informational advantage. So that small company aspect then drove me into investing in private equity and small companies. And I was doing that in a big house and I wanted to be quite activist.

[00:13:30] Oh! I realized that if you were in a big house, and you were being activist with a small company, and you were maybe suggesting that the management team, maybe the chairman, might not be ideal, or you're wanting to fire a board, or stuff like that, or get aggressive, then it's quite difficult to do in a large house, because all of a sudden You become the headline and The compliance department or somebody else is saying oh gosh We don't we [00:14:00] don't want the brand to be having that kind of headline I thought of course I know that this is the right way to be investing in this asset class So I need the freedom to be able to do it And therefore, I need to find the right house and maybe it's a case of actually making my own destiny to a certain extent.

[00:14:18] So I then went off and joined, uh, I suppose it was a BT at that time. It was a buyout from another company called Electra. I was only there for a couple of years. I probably didn't do my due diligence. I was going into the crash. One of the first crashes. I didn't do my due diligence properly on the partners I think that I was getting into bed with.

[00:14:37] And I just didn't feel quite comfortable and I thought, I need to find somewhere that allows me to Um have the integrity that I think I should have or an investor should have and I've known downing as it was the 17 odd people that it was um at that point for years and years and I'd always sort of regarded them as being great but rather [00:15:00] boring old asset backed Investing in hotels and pubs and stuff like that.

[00:15:04] I love doing the sexy stuff. I always think they're really interesting equity stuff Um, but they were good people. So, um, yeah, they had raised money for um some Venture funds that I hadn't gone quite to plan and they needed a fund manager to come in and sort them out so I said I would come in and help sort them out and we'd merge those funds and the quid pro quo was that I Could I had my little business plan that I could try and grow a fund management business Yeah on the back of what they were doing the private equity side So and that was it really that was about 10 years ago, but we've done it really carefully and but you mentioned Simon So I've done it with We brought in people who I, you'd want to, you'd want to go out for a beer with, you'd want to spend time with, they've got integrity, they do what they say in the tin and they're as passionate as I am about smaller companies, about the field that they're in.

[00:15:56] So yeah, we've got some, some really good fund managers that [00:16:00] are, you know, we're all sitting together, all doing completely different things. I know that Simon sometimes calls me the CIO. I'm not a CIO because that would be me telling him what. I think he should be thinking from a macro perspective. All I do is, all I do is put them in a room and, and make sure they've got the compliance, the support and everything else to round about them to be able to, to do their jobs.

[00:16:21] So I think freedom for a fund manager is really important. And, and that's what I believe in and freedom with the right. Right. Can constraints around you, obviously, but, uh, yeah, that's what we're doing. So it's just like minded people together.

[00:16:36] Stacy Havener: So now you have, so you had the mandate to start this asset management.

[00:16:43] Group business inside of downing. So how many managers? Like if you think about them almost as little businesses in and of themselves

[00:16:54] Judith Mackenzie: Yes, I always get really bad when I I get that's okay how many people do we have how many mandates? [00:17:00] Um, so we have a uk small account small and mid cap income fund. Um, we've got European small, uh, small cap.

[00:17:09] Um, we've got the Fox funds, Simon's funds. We've got the mandate that myself and Nick run, which is UK micro cap.

[00:17:17] Stacy Havener: Okay.

[00:17:17] Judith Mackenzie: We've got a small cap fund. So quite UK focused at the moment, one European, and obviously Simon doing his

[00:17:27] So, um, yeah, I'm sure one day we'll have something that's U. S. focused, ideally small cap. Yeah. Um, and, and certainly emerging markets is another small cap area, probably. And what, if the one thing that kind of runs through all of us is that we're quite focused, so we tend to invest in, Between 25 and 40 stocks, we're quite bottom up and we're typically investing in people.

[00:17:53] So some of us have got a more value style, some of us got a more, um, quality style, but typically we're [00:18:00] investing, we've got a strong due diligence process that That really is people led.

[00:18:05] Stacy Havener: We're gonna pull that thread forward. What's the total AUM of the group right now?

[00:18:09] Judith Mackenzie: So dining in total is one point one point four and we're about 600.

[00:18:15] Okay, so it's still quite small Yeah, so quite small but good

[00:18:18] Stacy Havener: and boutique the way we're redefining it right special and different So let's take that people thread forward because this is something that's Near and dear to my heart, having raised money for boutiques, and I try to sort of say it as many times as I can, which is people do business with people.

[00:18:37] And I think that's true. In your story, you shared even finding partners, finding managers to bring onto the market. Downing platform. But you also alluded to it in the investments that you're making. And I think it applies when allocators are choosing managers to work with. So I'd love for you to talk about that qualitative piece.

[00:18:57] I think it's we all know it's [00:19:00] important, but I think we underestimate how important it is and how important it is. Talk about how that shows up as an investor in businesses for you. How do you make sure, you know, what are you looking for in these people and how are you analyzing or, or vetting them?

[00:19:16] Judith Mackenzie: Oh, that's a big question.

[00:19:17] So, I mean, part of it is, um, making sure that people do what they say in the tin. So, I know that Simon talks about this a lot and that is that he doesn't want to buy a value manager that gets unsettled in a period where value is out of favor. And it's the same for us when we're looking at businesses, we want to be able to see that a management team is capable of riding through the cycles because, yeah, life gets tough, you know, and it's horrible and you don't, what you don't want if you're investing in something, if you think you're investing in a widget manufacturer in the north of England or whatever, then you don't want them turning into some kind of AI guru, because the widgets are out of favor, you know, you, you want them, you're investing [00:20:00] in them for that, that purpose, that thing.

[00:20:03] Yeah. Yes. And you'll be putting them in a portfolio against other things in the portfolio that help the diversification. So you're looking for consistency, continuity, and resilience, that word again, through difficult times because everybody can make money through easier times, but you want to make sure that they stick to their knitting.

[00:20:22] They actually do what they say they'll do. And I think you can only do that by spending time with them and by everything they've ever written. Ooh, yeah. Yeah. Yeah. Wearing to what they've, they've said before, not trying to catch them out, but really looking for that integrity angle where, um, if they've said that something is a, a key performance indicator, say five years ago, and then they change it after two, three years, that's not a great thing.

[00:20:51] If they were to change it, they need to tell me why they've changed it and why it's for the better. So it's really about being able to explain to me as an [00:21:00] investor. Why, why back them as individuals? And that has to be about integrity and following the path that they've said they are, and keep doing it.

[00:21:10] Because I can make the judgment on whether that widget is a good widget or not, and I'm really, I'm looking for them to execute on what they say.

[00:21:17] Stacy Havener: You know, it speaks to the rigor of the qualitative research, which I, which I also don't think people Talk enough about I think there's this really negative knock on story, which is that it's spin Right, so you have some investors to say well, I don't want to meet the management because they're going to put some charming person at the head and then they're going to come in and they're going to wow me and sort of like You know flash their white teeth and you know, i'm gonna get caught up in just the charm factor But to me, that's not it right and I think qualitative doesn't mean that you're just sort of taking narrative at at face [00:22:00] value And buying into that I think what you talked about there There's a lot of rigor and I can remember very similarly One of the more intense due diligence processes we went through with one of our clients, it was like a two year due diligence.

[00:22:17] And every time the founder of this boutique met with these with this allocator, they recorded the meeting. Now this is before AI. Okay, they recorded the meeting. They took So the notes were insane, like stacks of papers would come with them into this meeting and they would do exactly what you said. They would go back in time, go back to names that that and want to follow that thread or what changed or or we saw that this happened and you didn't sell.

[00:22:47] Why? And it's I mean, that fund manager would leave the meetings, he would have to put the chair of the car back, his head would be banging, he's like, this is the most intense thing I've ever gone through. But it was [00:23:00] qualitative. Yeah. And I don't think, you know, rigorous research and qualitative are used in the same sentence that often.

[00:23:07] Judith Mackenzie: Yeah, no, that's true actually. You know, you can sit down with a spreadsheet as much as you like, and I love numbers, yeah? Yeah! That's the good bit, that's the lovely bit. That's the easy bit, but the difficult bit is that qualitative bit where you are spending time with management. You're And it really isn't about trying to second guess them.

[00:23:26] It's not about trying to figure it out. It's trying to just really understand what their drivers are and if they're consistent because if you can get that bit right and you get the The markets and all the other bits of the business, right, then they tend to work out themselves. The other really important thing I think I've learned so much now through the years is the importance of a good board.

[00:23:47] So you can get a management team, you can get a really cracking management team, but they tend to be entrepreneurs and they tend to, they tend to be sometimes quite young, they might need guidance. But if they've got some [00:24:00] Oh, guy. I'm sorry. I'm saying they're used to work at a big PLC.

[00:24:06] Stacy Havener: Yeah,

[00:24:07] Judith Mackenzie: then they're not like be sitting down with your grandfather.

[00:24:09] Yeah, you'd have a nice story, but you wouldn't get the right kind of guidance that you need for an entrepreneur. So the importance of governance and boards for me has become so, so apparent. And again, that goes back to that people aspect. If you get a good chief exec, that's a good operator. And a good board, a good chairman, chairwoman, then actually everything else looks after itself.

[00:24:31] If you've got a company that's in the right space, you really literally need to do nothing. But a lot of what we do is helping boards get to that position and moving on some. Those older gentlemen that probably should be spending more time in the golf course. So it's, you know, it's, uh, that, but when you get it, right, it's amazing.

[00:24:52] It works really well.

[00:24:53] Stacy Havener: Yes. It's interesting too, because when I think about boutiques that we've worked with, [00:25:00] very few of them have any kind of advisory board in the States, I think in the UK, it's a little bit different. I think there is kind of more structure and more sort of support and Um, I see more boutiques, even in like the marketing elements of the investment industry that have advisory boards, but it's very true as an entrepreneur that you, even if you don't have to have a board because you're not a public company, there's incredible value in having people that you can bounce ideas off of.

[00:25:33] And I wonder why more boutiques don't do that. They should, even if you're just putting together like a group of advisors that you meet with quarterly, I'm on the board of a boutique and it's magical what happens in those meetings. Great, great ad. You know, I always struggle with this question, but people ask me, so I'm going to ask you because you alluded to the sort of the, the old white guy that should be on the golf course, which neither of us are.

[00:25:58] That, uh, [00:26:00] that persona. And so when did you get into the investment industry? What year? I know this is like the way back machine.

[00:26:10] Judith Mackenzie: That's numbers again, isn't it?

[00:26:11] Stacy Havener: Um, yeah, I'm sorry. I'm making you, I'm making you

[00:26:15] Judith Mackenzie: 29 years ago, 30 years ago. So yeah, I've been through a few cycles.

[00:26:18] Stacy Havener: So you've been through a few cycles and you came in the industry when it was, it was even sort of more pronounced that it was, it was

[00:26:25] Judith Mackenzie: just before I'm thinking timing wise, it was just before the tech bubble.

[00:26:30] Stacy Havener: Okay.

[00:26:31] Judith Mackenzie: I was a tech analyst and I suppose technology investor.

[00:26:35] Stacy Havener: So late nineties. Yeah.

[00:26:37] Judith Mackenzie: Yeah.

[00:26:37] Stacy Havener: Yeah. Same for me. So I was, I got into the industry in 98 and so, and you are a very strong personality. I can tell, and I can, I can feel it in your story. And of course, when you talk, all I can picture is brave heart, like running through the fields and you know, and I'm like, no, this, you are a force, which I think you have to be as a female in this business.[00:27:00]

[00:27:00] When people ask me about that journey, I sort of think they're always kind of like, oh gosh, it must've been so challenging and it must've been so difficult. And I feel, and I want you to kind of share, but I'll go first to sort of, you know, I've never felt that. I, I'm very aware of the dynamics of the industry and I'm very aware that I'm the only female in the room many times.

[00:27:25] But I actually, maybe it's just a trick, Jedi mind trick I play on myself, I actually feel very lucky, and very, very honored to be there, and like I am, I feel proud to be in that room, and so, and I think it's an advantage, when I talk it sounds different. than everybody else there. And the way I think is different, so the ideas are going to be different.

[00:27:48] And so I wonder, what's that journey been like for you?

[00:27:51] Judith Mackenzie: Yeah, sometimes I feel a little bit guilty because I, I feel as though my journey should have been difficult because so many others [00:28:00] were. But I think for 99 or 95 percent of the time, I probably used it to my advantage to a certain extent. And it's not, that's not saying that I took advantage of it.

[00:28:10] But I was very aware that I was probably, well I was the only, typically the only female in the room. So, actually I think it's probably more difficult now to be the, be a male in the room with so much attention. Uh, probably now being diverted towards And in the right way towards women, but actually it was to my advantage when I was younger because you got noticed quite easily and when Some sometimes scarily when you said something.

[00:28:39] Yeah, people always do That that was scary to start with but then I realized that as long as you weren't being stupid about it You could maybe use that and don't get me wrong. There were certainly times when there was a degree of harassment and Sexism and whatever, but I kind of dealt with that by dealing [00:29:00] with it head on and almost trying to embarrass the people that were doing that to me, whether it be male or female.

[00:29:06] Um, it's so funny.

[00:29:10] Stacy Havener: You know, you're not, it's so true though, because I do think, you know, I do think you have to have a certain constitution, a certain personality to be able to deal with that. So to your point, what maybe Was a negative thing or a derogatory comment or something. It can either crumble you or you can simply stand up to it and meet it head on with the same level of I will not accept that and it takes a lot of confidence to be able to do that, especially if it's happening like in a room in a meeting.

[00:29:43] Yeah. And so how like thinking about you. Other women who are on the come up, you know, the next generation now who are sort of saying like, okay, you know The judiths of the world have have broken some of that glass ceiling and and opened doors for us What advice do you [00:30:00] have

[00:30:00] Judith Mackenzie: for them? You know, I think they get it already.

[00:30:02] I think they're the young professional young women that I deal with now They're, they're far more on it than I ever was. They, you know, they know what their career path is. They're, they're questioning where they are. They want to know what the next stage is. And, you know, they're, they're not really letting anybody away with anything, which is brilliant.

[00:30:20] And I think, I think all that we can do, as maybe the slightly older generation, is to help and support them in that, and, and for them to know where they come to for for that kind of support. So, you know, I think I think the majority have got it pretty well sorted already. I think what worries me slightly is the kind of almost the generation, especially in the UK before that, where, you know, there, there's still a lack of education.

[00:30:46] In schools as to why finance, especially being a female in finance, would be a good thing. So, you know, I think the more that we can shout about it, and in fact we do it, we've got a little podcast that we, uh, we've got where [00:31:00] it's Rosemary, one of our other fund managers and myself, uh, talking about, um, You know by why you should be a woman in finance and and actually all the good things about it So, you know, we're trying our bit to to get out there as well and um shout about it

[00:31:14] Stacy Havener: yeah, I did, you know, I love that you're doing that and making a conscious effort to be a Positive voice in that conversation.

[00:31:21] We did a program too Where we went into a into a high school for two years and we did a program on financial literacy But also on career options and finance and you know And it was amazing. It was amazing. I think the financial literacy piece really hit But what I found was it was almost too late on the career path side because a lot of those girls had already made decisions even if they didn't Totally know what they wanted to quote be when they grew up.

[00:31:55] They sort of knew directionally where they wanted to go and finance, wasn't it? [00:32:00] So it's almost like, I don't know when you have to start the conversation, but I felt in my experience, like high school was a little bit too late. Yeah, I think that's true.

[00:32:09] Judith Mackenzie: You know, the formative finance years or when you start thinking about money are between eight and nine.

[00:32:15] So coming after true. Wow. When they're 15 or 16, probably a bit late, isn't it? That's a good point.

[00:32:21] Stacy Havener: Yeah. And so let's broaden this conversation a little bit wider beyond the female piece. Just kind of in general, one of the things that I've noticed in my work with, with asset managers who are predominantly male, predominantly white male.

[00:32:39] So there, you know, there's that. However, what's interesting is they're also harboring a lot of fear. Around letting themselves be seen authentically, I think the industry as a whole sort of upholds this [00:33:00] idea that no one really cares about you as a person, like they care about the returns that you can generate.

[00:33:07] And that's true for all of us, and so when we would come in and I'd be there, okay, we're going to tell your story, it would be like visible sweat and like, you know, I don't want to do this. I, I don't understand why you're making me do this. And it was very uncomfortable for them. And I think it's getting maybe a baby step better, but there is still this, you know, there is still this challenge for all of us in this industry to be authentic, to be more than the numbers.

[00:33:39] And how have you personally evolved on that front, sort of like? I mean, personal brand is overused and authenticity is probably overused, but do you feel you show up as your real self and has that evolved for you over time?

[00:33:55] Judith Mackenzie: Uh, yeah, I don't think I could do anything else apart from,[00:34:00]

[00:34:01] I'm not very good at lying, which is maybe a good thing as a manager. But, um, I do think it helps having come from maybe what might be regarded as a non conventional background, where I've not come through the kind of Ivy League, I've not gone down the typical route of being honed through an intern program, and therefore I think you're allowed to be yourself a little bit more.

[00:34:26] Stacy Havener: Yeah.

[00:34:26] Judith Mackenzie: I think it's very difficult if you, if you're intellectually Potentially fantastic as a fund manager. You're, you're probably going to get, you know, channeled down that route where any bit of personality gets

[00:34:37] Stacy Havener: Yeah

[00:34:39] Judith Mackenzie: So I that's my only way of explaining it. Um, but I don't find I don't find it difficult Well, I as I say, I think i'll find it more difficult doing it the other way

[00:34:48] Stacy Havener: Yeah.

[00:34:48] And how about for your team? So obviously we mentioned Simon. Yeah. He's very great at, you know, showing up as himself and being really creative and being really thought provoking and challenging the [00:35:00] status quo. Is that a culture that you've created? I seem to have.

[00:35:04] Judith Mackenzie: I don't get a minute's peace. They challenge me all the time, which is great.

[00:35:08] Even, even, you know, the most junior, they'll be giving me a hard time, so I've got a rod for my own back on that one. So yeah, they've all got their own personality and they're more than prepared to show it, which is great, but not in a, the one rule that I've got is there's no ego and nobody ever is allowed to bully or, uh, or even say anything in a bullying nature.

[00:35:29] But I don't think any of them would because, you know, they're, they're, they're people that have got the right attitudes and very good in collegial. Collegiate is a terrible word, isn't it? Because it sounds as though everybody agrees with each other. Yeah, but it's not terrible. They look after each other's backs, which is nice.

[00:35:45] Stacy Havener: It's interesting, because in many ways you're almost like a multi boutique. And so, how do you balance that? Because, you know, it's one thing for like the firm to have a culture and this is our culture, but then you've got teams that maybe [00:36:00] have their own spin or their own belief. And how have you You know, it sounds like you get together as a group, so all the fund managers getting together as a group.

[00:36:10] Tell us more about sort of what the inner workings look like of how you interact with each other.

[00:36:14] Judith Mackenzie: Oh, gosh, that's a complex one. But it's even more complex than that, actually, because Downing as a whole is a, as you say, it's kind of like boutiques within boutiques, so not just Yeah. I'm part of the business, but also our renewables team, our property team, um, and you know, all the other bits and pieces of compliance, whatever.

[00:36:32] And the guys and girls that are in the renewables team are, um, you know, they're real deal doers as opposed to equity fund managers. So the culture is quite different and the private equity guys on the property side, again, you know, they're, they're not equity driven. So we've got quite a lot of different personalities.

[00:36:50] The, um, all have to not have to, but you know, the real benefit is being able to co mingle and that's not, as I say, not just my team. So I think the [00:37:00] challenge of that is having grown from being quite a small company up through the years, up to the last sort of 15 years from 20 odds to 250. I think we've really valued, or to be exact, Tony McGee has really valued that culture and it's, um.

[00:37:17] It's, it's about getting together on a regular basis, it's not having any ego, not having any agenda, so when he walks into the room, I'm sure people, yeah, of course people notice, but, you know, he does it in a way that is, um, it would be just like anybody else walking into the room, so, uh, it really is not having that.

[00:37:36] Um, status and title that, that maybe awards you something that you haven't deserved. You know, everything, I hope, certainly comes through merit and, uh, and the jobs that people do. And that's from the, the lowest entrance into the firm right the way through to, to the senior executive, I hope.

[00:37:53] Stacy Havener: And it sounds like there's in person collaboration.

[00:37:57] Because that's also been kind of a thing, [00:38:00] right? Like we were all forced to be remote and now, so is there a lot of, how, like, how do you balance that? Cause I know you're also geographically. Do you make sure you have time together? Like physically, like you're in the sitting in the same room.

[00:38:14] Judith Mackenzie: Yeah, yeah, absolutely.

[00:38:15] I mean, I know you're in the States, so the UK is a tiny, tiny little bit of a porn compared to the US. But yeah, we are, my team's all the way throughout the UK, but we make a point. Uh, of being sitting together every week and most certainly for two or three days every every two weeks And that will include going out for a pizza or a curry or something.

[00:38:36] I love that. Yeah It's really important. That's

[00:38:39] Stacy Havener: great culture has been a big thing. I think on almost every podcast That i've recorded and I think we're in the 80s now culture has come up in some way I mean even for the fund managers when they're talking about, um Investments that they're vetting. They often talk about, it's almost like a cultural alpha, [00:39:00] like, like how can you really understand a company that you're looking at and their culture?

[00:39:05] Do you find that as well?

[00:39:06] Judith Mackenzie: Yeah. I mean, I've used this analogy a few times and it's rather crass, but I, when you're out on site, the thing I like doing is hanging around by the ladies loose because if you're, If you're, if you bang into somebody in the loo, um, well, I'll tell you things, but you know, you're, you're, you might bang into the cleaner or, or whoever it is.

[00:39:27] When you, when you go, when you go on a site visit, it's a bit like the king or the queen going on a visit. You know, it's, there's fresh paint everywhere and everything's all shiny and lovely. But actually you want to get a grip of the culture and you only do that by meeting the operational management team and the people below it.

[00:39:44] And, and it's really. It's that that, um, that gives you an idea as to the culture. Um, and I remember, uh, I think it was Rosemary, one of my colleagues who, uh, spoke up, her manager, who said that she turned up on a side visit, and she was early, and [00:40:00] she just sat in her car, and the chief exec skidded in. five minutes before the meeting, um, and like, went running into the building, was shouting at people and whatever, and she thought, uh, I don't know, I don't know if I like this company anymore.

[00:40:12] You know, so it's just little things like that that you pick up when you're on site with a company that you, yeah, it tells you a lot about the culture.

[00:40:19] Stacy Havener: And I think it also, going back to something we talked about earlier around narrative. I think there's like this idea that sometimes you can get caught up in a charming C suite person who's, you know, in the meeting is going to tell you a really great story, but how cool that your colleague was able to see a glimpse of what that person might be like outside of, you know, the boardroom and how much more telling that is.

[00:40:45] That, that almost should be like part of the process, go hang out by the bathroom, show up early. Yeah. That's the way to do it. Yeah. Exactly. Exactly. And so when you think about [00:41:00] growing, this is my last sort of like formal question and I have some other questions to help us get to know you a little bit better.

[00:41:05] But when you think about sort of the growth. Of downing asset management. So you, the, the team that you're, you're part of, what does that look like for you? I mean, you shared with us at the beginning that, you know, you're, you're, you have maybe a tilt towards UK, Europe, maybe a little bit of emerging markets in there.

[00:41:25] How are you thinking about growth? How big do you want it to be? And, and You know, sort of, what does that all look like for you?

[00:41:32] Judith Mackenzie: Um, I don't think, I don't think you need to put numbers on it. But, what we're trying to do is offer investors, maybe going back to the conversation that we had at the very start, we're trying to offer investors something that's different, that they're not going to get in an ETF.

[00:41:46] Stacy Havener: Mm.

[00:41:47] Judith Mackenzie: That they might be as part of a small part of the portfolio to diversify and where we're, we're not doing the same thing as other people are doing. So it's not just, it's not just that you, you might buy a small cap mandate from [00:42:00] us or a small cap fund from us. We're probably going to be investing in areas that other small cap funds don't or other small cap income funds don't.

[00:42:08] So it really is getting that diversification and the ability. to perform when maybe some of our, our peer group aren't. So, so that's probably the most important thing. And then we need to be focused. We bottom up type investors, 25 to 40 type, uh, positions and, and really quite diligent in the approach. So we can go out and Spend time at ladies loo's and car parts.

[00:42:30] Yeah. So that, that's the kind of ethos that we have. I would love to be able to branch more out of Europe and the UK from where we are at the moment because, well, Europe's quite a difficult place to invest in the UK even more so at the moment it seems.

[00:42:44] Stacy Havener: Yeah.

[00:42:46] Judith Mackenzie: But, you know, that will come back round and I know it will, but it would be nice to have a more diversified offering, maybe either local small cap or we'd love a specialist US small cap fund.

[00:42:56] So, if any of your managers out there that's looking for a, a [00:43:00] UK, a UK home, then, um, give us a shout. Uh, we're more than happy to entertain that. So, uh, that, that's really. What we'd like to add to the suite, um, as we go forward. And I think all of these mandates will never be multi billion type mandates, but we were, because we're niche and we're specialists and we're boutique, I think typically a size of between sort of three to 400 million pounds to 750 million pounds.

[00:43:28] Works really well for us. And, and actually that's, that's a nice size. You're, you're never going to be forced or you're never going to be forced into getting too big, uh, for the mandates that we run. And that's actually the real reason I like working with Downing. The integrity when it comes to running the money in the way is best for, uh, the investor is, is through our blood.

[00:43:50] It's really important. And you don't get that with larger companies, sadly.

[00:43:53] Stacy Havener: You don't. I think there's a big difference between. Asset gathering. [00:44:00] There are asset gather. There are asset managers who is what you're describing like we're here to generate alpha for our investors, and that's the primary. That's the primary aim of the firm.

[00:44:10] And then there's this point. There's this threshold where you tip across. And now you're in asset gathering and it becomes its own beast and the and the larger you get and the more assets you get, the more difficult it becomes to go backwards because any, any sort of retreat is looking like you're failing.

[00:44:31] Right. And you've built this big sort of machine that needs to be fed with all these people and the fees become their own focal point. And I love that you're saying we just don't ever want to get there. We don't ever want to get to that tipping point and, and we won't because I think it is a bit of an attract and repel some asset managers.

[00:44:55] A lot of the spin outs that we see from the big shops are saying exactly what you're saying.

[00:44:59] Judith Mackenzie: Great. [00:45:00]

[00:45:00] Stacy Havener: Yeah. So I hope some of our, of our listeners will reach out to you. Be fun to see some collaborations take place. It has been so much fun talking with you, Judith. And I, I am taking with me from this podcast many things, but one of the things I really am going to spend some time thinking more about is the word boutique and the definition of it.

[00:45:20] Because just moments ago you said we're, we're niche and we're specialist. And to me, that's what we need to celebrate. In this industry and I think that's what boutique is in so many ways. So how about a few minutes? My version of pruse questionnaire very very loosely based just questions Help us get to know a little bit more about you You've been fantastic and and candid i'm going to kick off with something that hopefully It's easy ish.

[00:45:51] What book inspires you?

[00:45:53] Judith Mackenzie: Uh, you know, I was going to cheat and then I thought about being authentic and I thought I [00:46:00] was going to cheat. I was going to, I nearly Googled inspiring book because I thought, no, it's just a book. Oh God,

[00:46:04] Stacy Havener: I would have been mad at you.

[00:46:06] Judith Mackenzie: That would be awful. So I'm going to give you a book that nobody will have read and it's so outdated.

[00:46:12] It's called The 39 Steps. It's by John Buchan. It's actually set in 1915. It then became a black and white Hitchcock movie. So this is how old it is. Um, I'm not going to give you the, I can't give you the whole story, but the theme is pretty simple. Um, so this is an innocent man. He's a Scottish. Uh, explorer and adventurer.

[00:46:34] So obviously he gets my vote already. Yeah, of course Um, and he he's in london as part of his adventures And and so he finds his body in a flat in london and he somehow ends up getting involved with um, well the war really, uh, and Germans who were, um, in London at the time and he has to [00:47:00] go on the run and, and he, he doesn't give up.

[00:47:04] Maybe that's relevant.

[00:47:06] Stacy Havener: There you go. That's why it's inspiring to you.

[00:47:09] Judith Mackenzie: Is that, I was just thinking about it. Yeah, um, this rather epic journey, um, Through the UK, uh, with him running away, trying to, um, prove his innocence, and it is about resilience and determination and, uh, wanting to, you know, he was determined to prove himself that he was innocent against all odds, and it's quite a dramatic story, but I won't, I won't go

[00:47:33] Stacy Havener: Ooh!

[00:47:35] But yes Alright, this is great! It's got Okay!

[00:47:38] Judith Mackenzie: Narrative and it's um, and it's the movie itself is a Hitchcock movie. So it's quite gripping too.

[00:47:44] Stacy Havener: Oh, okay. Never been said on the podcast and I'm always a fan of that. So thank you. 39 steps. Resilience. Okay. We're going to go from books to places. What place inspires you?

[00:47:56] What's your happy place?

[00:47:58] Judith Mackenzie: That's dead easy. Anywhere in [00:48:00] the Northwestern Highlands of Scotland. I

[00:48:02] Stacy Havener: knew you were going to say that. That's very authentic to you and this conversation. And I love it. You'll have to, um, so if people want to get a glimpse, what could we Google to like, look at the images?

[00:48:15] Judith Mackenzie: Oh gosh.

[00:48:16] No,

[00:48:16] Stacy Havener: uh,

[00:48:17] Judith Mackenzie: oh, you put me on the spot there. Um,

[00:48:20] Stacy Havener: I know. Well, I can add it into the show notes. I don't have to be like quick.

[00:48:24] Judith Mackenzie: I'm going to say a word, but you won't understand it. Achmelvik Beach. But I will spell that for you so you can put it on,

[00:48:30] Stacy Havener: on,

[00:48:31] Judith Mackenzie: on the, on the

[00:48:33] Stacy Havener: notes. Okay. You're going to spell it for me?

[00:48:35] Judith Mackenzie: Oh, um, go on.

[00:48:36] I don't know if I can spell it. A C H M E L V I C H.

[00:48:41] Stacy Havener: Okay, cool. And so we'll get to see what, what, uh, what this place looks like that inspires you. I want to see it. So that's great for me too. Um, and what's the reason? Is it because that's where you're from, or is there more layers?

[00:48:54] Judith Mackenzie: Uh, no, I think, yeah, it's the kind of area that I grew up in, and it's [00:49:00] Well, I think it's probably, I've traveled a lot, been very, very lucky to travel a lot in my time.

[00:49:04] But I do think that the West Coast of Scotland, the North West Coast, is one of the most beautiful places in the world. It's got everything, it's got mountains, it's got beaches, it's dramatic. I suppose I quite like it because there's not a lot of people about it as well.

[00:49:17] Stacy Havener: And

[00:49:17] Judith Mackenzie: so, yeah, it's rugged and wild.

[00:49:20] It's lovely.

[00:49:20] Stacy Havener: Whoa. Okay. I can't wait to Google this. All right. Now, switching gears. You are giving a talk in a stadium full of Judith fans. I know, this is probably like the least favorite thing you ever want to do, but let's just, just humor me. So you're going to give this presentation, and they're going to play a song as you take the stage.

[00:49:45] So walkout anthem that they're going to play?

[00:49:49] Judith Mackenzie: Um, probably not appropriate but, uh, it's, it's, it's human by the killers and I like that one [00:50:00] because it, the main, the main, um, line is are we human or are we dancers? And that, that we're dancers because you always want to be something just a little bit different.

[00:50:12] A little bit extra special.

[00:50:13] Stacy Havener: I love this. Spotify after we Hang up. All right. Now what profession other than your own would you like to attempt?

[00:50:26] Judith Mackenzie: Uh, I would have loved to have been a journalist a kind of war correspondent Something like that.

[00:50:33] Stacy Havener: Ooh. Oh my gosh.

[00:50:35] Judith Mackenzie: Yeah.

[00:50:36] Stacy Havener: Wow. Yeah. Okay. That's, that's you. That's vibing with you, with what I'm learning and what our guests are, or what our listeners are learning about you.

[00:50:45] Okay. Flip side. What profession would you not like to do?

[00:50:48] Judith Mackenzie: Oh, I said easy. I wouldn't want to be a passive fund manager.

[00:50:55] Stacy Havener: More or less than the ice cream.[00:51:00]

[00:51:02] Judith Mackenzie: Yeah. Okay. They're on a par.

[00:51:07] Stacy Havener: Such a great answer. Yeah. I know. But this is good. This is attract and repel. You know, it's just not for you. It's not for me either. Okay. And last question. What do you want people to say about you after you've retired or left the industry?

[00:51:22] Judith Mackenzie: Oh, um, well, I would, I would like people to have respected my decisions, even though sometimes they might, might have not been the right ones.

[00:51:34] And well, like any fund manager, I would have want them to go, I'd want them to say, Oh yeah, I've actually, I made a good return out of it during the campaign. Yeah, that was good. But I think, yeah, not, not, when I say respect, it's not about looking up, it's about, um, it's about appreciating decisions that, um, have had to be made that sometimes are difficult and, but sometimes in the end are the right ones.

[00:51:59] Stacy Havener: Oh, [00:52:00] you know what? I love that answer. I love the fact that it combines qualitative and quantitative. I think we've talked a lot about that today. I think. You very clearly have both sides. It's been important to you in your career. It's important to you today in the business you're building. And it has been such a joy to spend time with you, Judith.

[00:52:22] Thank you so much for your time and your candor and your advice. Um, I hope to meet you in person when I'm in London.

[00:52:29] Judith Mackenzie: I hope so. That would be a treat. Thank you. Yes.

[00:52:31] Stacy Havener: Thank you for being here. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.

[00:52:39] The information is not an offer, solicitation, or recommendation of any of the funds, services, or products, or to adopt any investment strategy. Investment values may fluctuate and past performance is not a guide to future performance. All opinions expressed by guests on the show are solely their own opinion and do not necessarily reflect those at their firm.

[00:52:59] Manager's appearance [00:53:00] on the show does not constitute an endorsement by Stacey Havener or Havener Capital Partners.

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