From the trading room to leading an asset management company, Roni Michaly shares his journey and the key lessons drawn from his experience. At the helm of Galilee Asset Management, he explains his daily role, his structured investment method, and his thematic approach, notably in growing segments such as space exploration.
In a context of uncertain markets, he also offers his macroeconomic view and concrete advice for individual investors who wish to invest in the stock market. You can find the full interview in video and selected excerpts in this article.
Video: the investment method of a CEO of an asset management company
Roni Michaly, how did you become CEO of an asset management company? What training / experiences most shaped you during your career?
I’ve always known this finance sector existed; it was my father’s profession and it is also a family passion. What I find fascinating is that all sorts of information can influence markets. One must be very open-minded.
I started on the Swiss desk at Société Générale, and I learned responsiveness and efficiency.
Afterwards I moved into asset management, where I learned how to set up processes. An opportunity arose with my uncle’s departure, and I took over his activities as head of Galilee Asset Management.
The most challenging part was managing people older than me; you have to establish your legitimacy and implement processes. You are not prepared for the solitude of management. You don’t necessarily have colleagues. That was hard at the beginning.
What does your job as CEO of an asset management company entail concretely?
I have four roles in one:
- I manage the teams, set the strategy, set the objectives, provide solutions;
- I develop the company, attend meetings with partners: CGP, family offices, marketing, press;
- I take care of portfolio management, selecting funds and ETFs;
- I protect the company in case of disputes.
Within the same hour, I manage, speak with partners, prepare an interview, and decide on management matters.
How do you make your investment decisions?
At Galilee Asset Management we have adopted a coefficient-based system, with:
- Investment rational, coefficient 3: you must be convinced by the thesis;
- Valuation, coefficient 2: we ask whether we are buying expensively or cheaply;
- Technical analysis, coefficient 1: we look for positive momentum.
Screening is initially quantitative; we look at the balance sheet, income statement, cash flow, and then becomes more qualitative as we examine management, opportunities, strengths and weaknesses. We assign a growth score, a value score, and a momentum score.
Finally, comes the stage of portfolio insertion. Like a football team, the stocks must be complementary. You should not select stocks that do the same thing.
Concrete example / investment case: let us take the space exploration theme, how do you analyze it?
Thematic investing is completely different from traditional investing. It is inherently international and multisectoral. It consists of selecting themes with the greatest stock market potential. To do this, one must determine whether the theme is structural by looking at the long-term prospects, at least 20 years ahead.
We can, for example, think of space exploration. It is structural, envisaged over several decades, encompassing satellite navigation, internet communications, financial transactions, energy transition, meteorology, industry, health, technology, the cloud, and cybersecurity.
The catalyst for the development of space has been the drop in launch costs. We have moved from $18,000 to $2,500 today.
On this theme, it trades at about 27 times earnings, a little pricier than the market, but it is a theme that attracts interest.
What is your best / worst investment decision?
My best investment decision: I invested in oil in April 2020. It was worth almost nothing. I waited for the crisis to pass. We achieved a significant capital gain.
My worst investment decision was the Klarna IPO, the buy-now-pay-later specialist. Growth was there, but profitability disappointed, and the market was disappointed.
The most important thing with a bad investment is: what do you do? Cut it? Hold it? Reinvest?
You must not persist if an investment is no longer good.
What is your current market sentiment? What advice would you give to an individual investor in the current context?
Volatility exists all the time. If you wait for zero risk, you never invest. Yet you must be invested, and continuously.
With the war, higher inflation, slower growth, one might think it is not the right moment. But for an individual investor, timing the market is very difficult. The best option remains regular, gradual investing to smooth entry points. If you always buy the same amount, you will accumulate more shares at lower prices. Unless there is a major crisis, it is good to continue gradual investing.
Finally, do you have an anecdote to share with us? What is the most unusual request you’ve received, for example?
One of my managers came to me with a PowerPoint saying, I’d like to create thematic indices. It was quite distant from his job. But we followed him, and we created internal indices, which we submitted to AGEFI and which awarded us the Cup of Innovation.
We created AMC (Actively Managed Certificates), a kind of trackers on space exploration, luxury, AI, and so on.
We went to see a provider and created indices.
Today, we have three activities: fund management, mandates, and index creation.
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