For investors it pays to be early, as long as you’re right. Just ask Mark Yockey, a managing director at Milwaukee-based Artisan Partners, who has been investing globally for more than three decades. In 2012 the 58-year-old portfolio manager started buying up shares of European cable companies — including U.K.-based Virgin Media, Belgium’s Telenet Group Holding and Ziggo in the Netherlands — which had been languishing as the industry struggled with discount pricing. Yockey, who grew up in a small town on the east coast of Lake Michigan, had watched U.S. cable companies profit from offering broadband Internet access bundled with television and phone service and hooking Americans on apps, games and streaming video. He was confident European cable would follow the same playbook.
“These stocks have been clobbered for the past five years — for the past ten years, really,” Yockey says with a distinctive Midwestern twang, despite living in New York since 2012 and in San Francisco for 17 years before that.
As it turns out, London-based Liberty Global started acquiring Yockey’s European holdings, becoming the largest international cable concern as it expanded its footprint, giving Artisan a tidy profit. Artisan’s global and international equity portfolios now have more than 4 percent of their $32.3 billion invested in Liberty Global.
Yockey, whose shock of white hair brings to mind a better-groomed Andy Warhol, scours a company’s financials and analyzes supply chains and competitors. Still, he stresses that a big part of investing is human judgment. “We want to get an understanding of what management thinks is important, and if that matches what we think, then we’re on to something,” says Yockey, an avid reader of biographies and memoirs and an admirer of Winston Churchill. Yockey joined Artisan, which has $107.9 billion in total assets, shortly after it was founded in 1994.
Charles Bracken, co–chief financial officer of Liberty Global, says Yockey’s questions always challenge him. “He gives an ‘Aw shucks, I’m just a simple boy’ impression, but suddenly he fires off a perceptive question about your business in a way that you never thought about before,” notes Bracken, who says he’s heard stories of Yockey walking out of meetings “when he thinks management is talking rubbish or the guys don’t know their numbers.”
Yockey is one of only a handful of international managers who have successfully navigated multiple economic cycles, currency meltdowns and political upheavals around the world. He can point to decades of outperformance. Artisan’s Non-U.S. Growth strategy has returned 11.44 percent on an annual basis since its January 1996 inception, more than double the MSCI EAFE Index’s 4.97 percent return during that period. Artisan’s Non-U.S. Small-Cap Growth strategy has returned 15.09 percent annually since January 2002, versus 10.51 percent for its benchmark, the MSCI EAFE Small Cap Index.
A contrarian growth investor, Yockey looks for good companies that are gaining market share, throw off plenty of cash and have products that can’t easily be replicated. “If you sell things at a premium and don’t have a lot of competition because you have a unique product, you generate profits that you can reinvest in your business or pay out to shareholders,” he explains. He wants quality businesses that will hold up in hard times, but like Churchill, he wants to stand alone and invest in an idea before everybody else piles on. When he started investing overseas in the early 1980s, he discovered scores of profitable companies that were being ignored by the market and could be bought for reasonable prices.
The Ludington, Michigan, native identifies long-term themes to guide the Artisan global team’s investments. Demographics, privatization, outsourcing and the environment are among those he is considering now. The firm’s global and international funds hold SABMiller to profit from the global brewery’s footprint in Latin America, Africa and Asia; Baidu, the Google of China; Tencent Holdings, China’s largest Internet portal; and carmakers BMW and Porsche Holding.
Yockey is willing to own stocks for many years and doesn’t hew to a benchmark. He is sensitive to valuation and won’t buy or sell unless the price is right. With a team of 21, including 18 research analysts and associates and two portfolio managers, Yockey is investing in health care, telecommunications and media, consumer and business services, chemicals and energy, among other sectors. He loves stocks whose complex stories scare off other investors.
“Mark can take the mosaic of what’s going on in the world or at a company and quickly turn it into an action item,” says Artisan CEO Eric Colson, who has been with the firm since 2005. “He doesn’t get lost in the noise.”
To explain his investment philosophy, Yockey talks about his children. During an interview after the Super Bowl, he said viewers were needlessly confused by Katy Perry’s half-time show, which mixed computer animation with live dancers. His 12-year-old daughter Clementine, named for Churchill’s wife, didn’t get lost in the details. When he asked her how she liked Perry’s performance, she looked him in the eye and said, “She rode in on a tiger, Dad.”
Fluent in French, Yockey — who has undergraduate and graduate degrees in finance from Michigan State University — got his first professional taste of life outside the U.S. during college, when he studied for a year in France and interned at bank Société Générale. As a young research analyst in the early 1980s at Michigan’s State Employees’ Retirement System, he bought shares of U.K. drugmaker Glaxo, the pension plan’s first-ever foreign company. Yockey came across Glaxo while doing work on SmithKline, whose big drug at the time was Tagamet, which treated ulcers. Glaxo had a comparable drug, Zantac, but was trading at 10 to 12 times earnings, far less than its U.S. competitor.
In 1986, Yockey moved to Waddell & Reed as a health care analyst. At the time, Overland Park, Kansas–based Waddell had one of the largest international mutual funds, the then-$253 million United International Growth Fund. Yockey says that even then the U.S. led the world in its investing prowess and its method of analyzing companies. Applying that process and those rules globally allowed him to find companies with great money-making potential — like Nokia. At the time, the Finnish conglomerate made rubber boots, snow tires, televisions and cell phones. The global revolution that was coming in mobile phones clicked with Yockey when he was in Hong Kong and saw an old woman talking on a mobile phone. “If an 80-year-old is using a cell phone, we’re all going to use them,” he recalls thinking. Yockey made 15 times his initial investment in Nokia.
“Mark focuses on what really matters and lets everything else fall away,” says Waddell CEO Henry (Hank) Herrmann, who was chief investment officer when Yockey was at the firm. “He’s a contrarian, but he’s also careful to be on the other side of the crowd for very good and thoughtful reasons.”
In December 1995, Yockey joined Artisan, a year after Andrew and Carlene Ziegler founded the firm. Andrew Ziegler had been president of Menomonee Falls–based Strong Capital Management; his wife, Carlene, had been a small-cap growth manager at Strong.
Yockey’s funds have grown steadily over the years, with a few blips. In 1998, when emerging markets melted down, he bought more of the companies he still loved, even though his assets had been cut in half. Investors returned when Yockey’s performance soon recovered and have stuck with him ever since.
Artisan invested in InBev in November 2008, the same month the Belgian brewer completed its $52 billion cash purchase of Anheuser-Busch. Shares of debt-laden InBev had fallen from $61 to $13 following news of the deal the preceding July. That month Yockey and Charles-Henri Hamker, a portfolio manager on the global equity team, flew to InBev’s headquarters to talk to CFO Felipe Dutra. “Things have to be pretty bad before people don’t buy a six-pack of beer,” says Yockey. He thought of the investment as a listed leveraged buyout whose shares would get a boost as the new Anheuser-Busch InBev’s cash-generating business paid down debt — and that’s exactly what happened. The beer giant’s shares were recently trading at more than $120.
In early January, Yockey and members of his team, including portfolio managers Hamker and Andrew Euretig, flew to Frankfurt to talk to the CFOs of BMW and Volkswagen after five years of closely watching both companies. The euro’s free fall and the changing competitive environment for the global car business had gotten Yockey thinking that it could be the right time to buy BMW and Porsche, which owns one third of VW.
Both Porsche’s and BMW’s stocks have been under pressure from slowing demand from China. Porsche, which is a complex holding company that includes Czech automakers, Swedish and German truck makers, and luxury brands like Bentley and Audi, is trading at a mass-market multiple even though it gets the majority of its revenue from its premium brands. After the meetings Artisan bought shares of both BMW and Porsche.
“When people are universally negative on something, that is an extra incentive for us to roll up our sleeves and dig into it,” Yockey says. “And when you dig into what people are negative about, often it isn’t that big of a deal.”
One of Yockey’s formidable traits as an investor is his patience. “Not once in seven years of knowing him has Mark asked questions about short-term results, the last quarter or year,” says Thierry Pilenko, CEO of Paris-based Technip, an engineering and construction company in the energy industry and a longtime Artisan investment. “He holds people accountable for long-term strategy. And always in a nice way.”
Yockey points out that although Churchill was a terrible investor and was broke most of his life, he had the utmost patience, not becoming prime minister until he was 65. As a friend at Waddell & Reed used to tell Yockey, “It’s a long race, so you can’t get too excited after one lap.” •
Get more on equities.
Follow Julie Segal on Twitter at @julie_segal.
