Interview #85 : Kevin Durkin (Ballina Capital)
Interview #85 : Kevin Durkin (Ballina Capital)
Buying out of favor assets trading at cheap prices
For this issue we have the pleasure of interviewing Kevin Durkin, Founder and Portfolio Manager, of Ballina Capital.
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Read the last two editions with Michael Wright (Kehlet Capital) and Andrew Martin (Fairlight Capital) ➡️
Hi Kevin, thanks so much for taking the time out to do this interview.
Can you please tell readers about your background, and how you got involved in investing?
First of all, thanks very much for reaching out, and the opportunity to interview with you.
Like many that eventually become Portfolio Managers, I was always analytical by nature. I studied business in undergrad, and securities markets were already very interesting for me as I did a thesis paper on the Junk Bond market.
After graduating, I went to Wall Street where I was trained in credit analysis at Chase Manhattan. Later I was fortunate enough to move to Lazard Frere, and work on research of leveraged and in some cases distressed companies. And I got to work around some very smart people and clients, and gain a sharp appreciation for capital structure, valuation and scenarios.
I wanted to strengthen those tools, so I got an MBA from the University of Chicago, and I became more intrigued with looking for thriving businesses, which is more of an equity pursuit than a credit one.
I made my way to the buyside, but in public equities. And interestingly, with this group, based here in Los Angeles, we were focused on International companies.
While I had a little bit of experience investing Internationally, this was a real eye opener for the world beyond American shores, and the complexity of investing successfully. I had a real passion for stocks, still do, and was a go getter, so I climbed the learning curve.
We started a firm, Causeway Capital, in 2001, my responsibilities grew, and I had great impact on our performance for clients. The firm expanded, and I received meaningful financial rewards.
Later, I decided I would rather leave and start my own firm, one that would be known for, more than anything else, passion for investing, integrity and putting clients needs first. And thus Ballina Capital was formed in 2017.
Previous to starting Ballina, my personal account activity was conservative. Today I have meaningful skin in the game. A substantial part of my wealth is invested in Ballina strategies.
Could you provide a brief overview of Ballina Capital - and in particular what strategies do you employ?
As far as principles of the firm, clients needs are first. We believe in having passion for investing in stocks; we want to remain employee owned; honesty and transparency are crucial.
We aim to have the right kind of culture, an apolitical one. Alignment is important; I should have a significant part of my wealth invested alongside clients.
Ballina has three employees today. Sue Baumer is our Operations Specialist, and Jackie Paolinelli is our Business Development Specialist. As we grow we hope to remain as close to 100% employee owned as possible.
We believe there’s a relationship between ownership and performance. And we are certain that our financial future is tied to the investment performance we can generate for our clients.
As far as how we build portfolios, we’re value managers. We prefer to buy assets that happen to be out of favor and are trading at cheap prices. Assets go out of favor because of behavioral biases, and this causes the stocks to be off the radar screen of many large investors.
We utilize a fundamentally based, research intensive, bottom up approach to stock selection. Portfolios are limited to a maximum of 45 securities.
Today at Ballina, we manage about $14 million. And roughly half of that is my own money. This is about to change. We have an Institutional account that we are onboarding in the next few weeks that will take us over $100 million of AUM.
We essentially have two strategies, International All Cap Value (minimum market cap of $500 million), and International Small Cap Value (market capitalizations between $500 million and $5bn).
There is significant overlap between those two. An institution wanted a version of these with a meaningful restriction on Emerging Markets, so we offer that today. This is why you will see that we have four composites.