Northstar Asset Management enters a cooperation agreement with First Avenue Investment Management


Adrian Clayton talks about the cooperation agreement signed between Northstar Asset Management and First Avenue Investment Management. The agreement resides in the area of research and as such we have a larger team, more analysts and are able to research more companies in more depth.

Many of us as South Africans are feeling a palpable sense of despair as we contemplate our futures against a backdrop of an ailing state, rampant crime, economic stagnation, and rudderless political leadership.

Our approach at Northstar, to navigating these troubled waters over the past decade, has remained highly proactive, pragmatic, and positive. We have enjoyed highs over this period, and strongly believe that our company has never been better placed to add value to our clients, followed by all our stakeholders – staff, shareholders, suppliers, charities and a broader duty towards society.

This life view is shared by Hlelo (Lo) Giyose and his team at First Avenue Investment Management. Lo started First Avenue in September 2010 and built a great business investing for institutions and pension funds. Core shared values such as unflinching moral integrity and diversity meant that a natural fit and friendship has developed between the two firms. In addition, we also share an investment philosophy of owning quality businesses.

In late 2022, we decided to enter a research cooperation agreement and for the investment teams to work together and adopt a single investment process. The combined investment team will have fourteen participants with significantly enhanced research firepower. This gives us greater research depth and breadth – covering more South African and global companies.

Although research was the initial touch point between First Avenue and Northstar, as we journey together, we are discovering the power of cooperation and collaboration in other areas too, including operations, marketing, distribution and compliance. Collectively, the two businesses manage a larger sum of money, which will also give us more bargaining power with suppliers. In time, this will increasingly assist us to manage costs to the benefit of our clients.

In many ways Northstar and First Avenue have ventured down a path that few investment firms are willing to travel. We believe that hubris often gets in the way, manifesting in views shared by many asset managers such as ‘’my firm is better than yours’’ and ‘’I am smarter than you’’ and for that reason, we should not work together! To make this work both firms appreciate the need to put our clients first, whilst casting egos aside thus creating an effective working partnership based on the sharing of ideas and teamwork.

Fortunately, this has worked really well so far and we have already managed to streamline our similar styles into one highly effective, structured approach. Against a colossal upside, the downside risks in this relationship are inconsequential. The outcome being two firms that are helping each other navigate financial markets better to produce world class outcomes for our investors.

I conclude with words from Nelson Mandela: “It always seems impossible until it’s done.” (2001)