In 2006, Malungelo Zilimbola took the bold step of leaving the safety of his burgeoning career in asset management, after spending his formative years with the likes of RMB and Investec, to set up his own asset management “shop”. Fast forward 17 years and Mazi Asset Management is an institutional-quality, boutique investment management business managing over R41-billion in assets… but Zilimbola is far from done.
Mazi Asset Management is not your average asset management firm – not by a long shot. Part of their difference, fittingly, is something that is core to financial investment: diversification.
“For us, we put the most value on diversity of thought, diversity of skills, people and perspectives, and we have a growing team that represents South Africa’s diverse cultures, backgrounds and demographics, as well as diversity in terms of professions and skills,” says Zilimbola, a man of great cheer and a smile that lights up the room.
Diversity is the recipe for the company’s success because it ensures a wider and broader pool of thought, understanding, experience and knowledge, compared to a firm that is made up of carbon copy cutouts of people all wearing the same old school tie. You need to drill even deeper, though, to discover Mazi’s true success, and that is Zilimbola’s attitude to his work and his people. That is the Colonel’s real secret sauce.
The folk on his floor also aren’t all just B Com or B Bus Sc geniuses… he’s also drawn his investment and strategic team from a broad range of fields. There are actuaries, accountants, auditors, engineers, mathematicians, statisticians, researchers, analysts, economists and even quantity surveyors in the mix.
The quantity surveyor among the team is Zilimbola, whose initial interest in the building industry saw him capped with a BSc in Building Surveying, Quantity Surveying and Property Development from UCT… but the world of finance was calling, so he studied a BCom (Honours) Finance.
“At Mazi, diversity means that we can find good ideas for clients, because we look at things differently. When a client includes us in their portfolio, they are adding a huge amount of diversity of thought to their portfolio. We have a joke at Mazi about investing with the ‘big boys’ of the industry. They all cycle together, and they all drink the same drinks and talk about the same things, so how are they able to find diversity in their investments? That’s what really differentiates us from the others… we are diverse, yeah,” he laughs.
Aside from a strong focus on diversity, Mazi’s investment strategy is founded on deep research and knowledge, rather than any knee-jerk reaction to past investment pain, dartboard speculation or cycling chit-chat.
“Investing is about the future, but you don’t have 100% of the information and the facts in front of you, right? So, you have to use history and current information to piece the information together to try and build a picture, but you will always be missing most of the pieces,” says Zilimbola.
Ultimately, the world of investment is all about risk, which means you need the personality and inner strength to be able to live with uncertainty in your work. Zilimbola laughs his beautiful laugh as he lays down the line facing any investor: an asset manager has to take a risk in order to make money for their clients… because the alternative is to stuff their couch with cash or stash it in a bank.
“If it’s in your couch there’s the chance someone might steal it,” he laughs, adding, “but if you put your money in a bank, you know all you will get are bank charges.”
Perhaps they should be called Asset and Risk Management firms, as the risks they take need to be over-compensated by the returns they bring in for their clients from their diversity of investments… but even so, you ultimately have to expose your assets to risk.
“We do a lot of fundamental research to understand every business we are contemplating investing in, its security and short- and long-term growth potential. We need to really understand the business!” stresses Zilimbola. “Warren Buffett always said, ‘If in doubt, don’t buy!’.”
Next up is to know WHO is running the business, their background, track record and even their personal moral code. Can you trust them? He reels off a list of names we all know, company management who have done the old “dine and dash” with the cash or built a company around ‘incredible’ returns that are based on Ponzi-style income generation.
“We are always interested in investing in a company that has a great business model that you can understand and that is run by a good CEO, backed by a good board. When you can tick off all those boxes then you will have the comfort to take a calculated risk on the company. There is always risk attached, hence the need for spreading one’s investments across a broad spectrum of companies and industries. What is key for success for your clients is to ensure that your calculated risk on a company is based on solid information and deep analysis. It should never be a gamble. You should never rely on the throw of the dice!”
Once they have taken a position in a company and invested some level of funds, the next step is to engage more directly with company management and to start getting more detailed information around revenue, cash flow, future projects and income projections.
“You don’t just go out and buy a big portion of the company. You buy small and build a position over time as you get more conviction in the company and its leadership,” says Zilimbola.
Mazi has traditionally been a long-only equity house, but has expanded its product offering to include Africa (excluding South Africa), Global equity Shariah, Multi-Asset and even Shariah compliant funds. The funds’ long and short positions are primarily driven by the Mazi long-term fundamental investing, stock-selection, investment process and philosophy.
Zilimbola bit the bullet early on to ensure his company’s systems and infrastructure were set up to enable Mazi to scale up seamlessly as the business grew. The growth itself was a challenge, as the business had to build trust with white capital, which holds the vast majority of investment assets. He had to rely on his work ethic and results to build Mazi’s track record and to create trust within the industry, but the bonus for Mazi is that their growth has been truly sustainable as they have built relationships of trust. That’s where Mazi’s diversity became such a strength in terms of creating results: their diversity of thought.
“We don’t like group think, because with that come blind spots, and that’s something that does not fit in with our risk management. If you don’t cater for certain risks because you haven’t thought about them, then you open yourself up to seriously dangerous levels of risk. We have diverse views, which is brilliant, but we also encourage failure, as that is how you learn, but if you do your due diligence then any failures are usually insignificant,” adds Zilimbola, who is a leader who welcomes his team and challenges his opinions. Plenty of leaders will kick the bins if their team is not filled with “yes men”, but Zilimbola thrives on his team having the freedom to question and challenge his ideas… and the ideas of every other person on the team, as this encourages debate and ensures the sharing of as many ideas and different perspectives as possible.
“As a leader I love listening to different ideas, different thoughts, different thinking, and then being able to kind of put it all together and say, ‘Listen, guys, based on what we’ve been discussing, this is where we’re going’,” says Zilimbola.
The beauty of this approach is that because everyone has been involved in the process and had a chance to mould the debate, team members are more likely to buy-in to the leader’s resolution.
A key moment in the growth of the company was splitting up the leadership responsibilities, as this allowed Zilimbola as the CEO to focus on creating and growing new products, while a CIO (Asanda Notshe) was brought in to manage the investment team and keep a handle on day-to-day investments. Notshe was brought into the company 13 years ago and his input has been massive in terms of the company’s growth and success.
“Asanda’s contribution has been incredible for the business, and it highlights the importance of leaders to letting go of the reins and trusting talented people who share your moral code and work ethic,” smiles Zilimbola, whose vision is for Mazi to evolve into a world-class global fund manager with African heritage and managing over R100-billion in assets! When you consider their approach to their work and the strength of their diversity of thought, they are perfectly positioned to lead the way with new investment opportunities. This is why they are putting the final touches to an Artificial Intelligence hedge fund. Knowing their due diligence and their process, it’s a good bet that they’re onto another winner.