Australian Fund Manager Mints Two New Billionaires

After a sharp dip in March, shares of Australian fund management giant Magellan Financial Group have rallied to pre-pandemic levels, making cofounders Hamish Douglass and Christopher Mackay billionaires for the first time.  

Douglass’s stake in the ASX-listed company plus past dividends, pushed his net worth across the three-comma threshold to $1 billion. Mackay’s shareholdings in Magellan and publicly listed Australian fund manager MFF Capital Investments—which he has run since stepping down as Magellan’s executive chairman in 2013—together with other private assets, vested him with a personal fortune of $1 billion. Douglas and Mackay declined to comment.

The year started on a high. Magellan’s stock soared 220% from the beginning of 2019 to hit $73.67 in mid February, but lost half its value a month later as the coronavirus roiled markets worldwide. Following the broader recovery in global equities, its shares closed at A$65.36 ($46.70) on Friday. Adjusted after-tax net profit rose 20% to A$438.3 million in the year ending in June from a year earlier, underpinned by its blue-chip investments that include McDonalds and Facebook. Average funds under management grew more than 25% to A$95.5 billion over the same period. 

But Douglass warned in July in Magellan’s 2020 InReview that after the events of the past six months, the company was taking a cautious approach and positioning its portfolios to withstand a further economic downturn, quoting Warren Buffett: “To finish first, you must first finish.” Meanwhile Mackay has switched almost half of MFF’s investments to cash since the start of the year. The ASX-listed company—originally Magellan Flagship Fund until it was restructured four years ago—posted after-tax net profit of A$25.1 million in the year ending in June, down nearly 90% from a year earlier.

Douglass, 52, set up Magellan with Mackay, 57, in 2006 after working together in investment banking. Douglass, who has a bachelor’s of commerce from the University of New South Wales, went on to become co-head of global banking for Deutsche Bank in Australia and New Zealand; Mackay previously was CEO, then chairman, of UBS Australasia.