Funds in Paradice

David Paradice is in an ebullient mood. The founder of his eponymous firm is planning a trip.

Paradice has a wish list of people he wants to meet: George Soros, Robert Bass and Julian Robertson, among others.

The 53-year old displays an affable manner, populating the ends of his sentences with quaint Australian slang delivered in flat nasal tones. His blue-eyed laconic manner can, however, quickly change.

Question him about Paradice Investment Management’s $3.5 billion large-cap fund’s minus 0.7 per cent return since 2007 and Paradice will sharply point out the fund’s benchmark, the S&P/ASX 200 Accumulation Index, has fallen 4.9 per cent during the same period.

Paradice grew up in the Hunter Valley town of Scone but went to The King’s School in Sydney. On the contrary, his 11 investment-team colleagues are all the products of state schools.

The team and chief operating officer will soon be getting stock in the firm while the founder will retain a majority stake.

Those who leave “will be paid out in dividends over two years to the value of their equity, based on the continuation of the overall business and their former business,” says Paradice.

The firm’s 18 employees are housed in a modest office with functional desks and tables, no receptionist and no art on the walls but blessed with a view of Sydney harbour from its largest meeting room.

“We pay for everything ourselves,” says Paradice proudly.

“There are no hire cars; we take taxis. We don’t have drinks in the office or do social lunches… well, perhaps once or twice toward the end of the year. We’re totally free to make decisions ourselves,” he says.

The austere working environment is mirrored in the hours before work. Sometimes he gets up with the help of his watch, which has an alarm and monitors heart rate and distance. Paradice runs up to an hour a day on the pavement or, when it is raining, in the gym.

He is in the office by 7 am or, at the latest, 7:30 am.  He expects a similar work regime from his colleagues.

“We always make sure as much of the day as possible is available for meetings with companies,” says Paradice. He shows a computer printout of the firm’s diary that details meetings almost every hour of the working day and night with executives in Melbourne and Sydney. “That’s how it’s done,” he explains. “You don’t do well sitting in the office.”

Paradice wants “ethical, hardworking guys” at his firm. “We have no marketing here. The only marketing there is this piece of paper,” he says, pointing to results of the firm’s four funds, three of which have all produced positive net annual returns since inception, most notably the $1.4 billion small caps fund, invested in companies outside the S&P/ASX 100 index, whose return is 18.4 per cent.

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