Sustainable Equities Boutique

In the research lab of the equity analysts

haenni_mark

Marc Hänni

Head of Swiss Equities, Senior Portfolio Manager

Meet Marc


Looking into companies before investing in their equities is akin to the research work that scientists do. It's no coincidence that in our Swiss Equities team a molecular biologist, Carla Bänziger, deals with the companies in the healthcare sector. Team leader Marc Hänni knows what a great asset she is, as the following interview with the pair demonstrates.

Marc, how is the Swiss Equities team set up?

There are five of us: two analysts and three portfolio managers. We have around 140 listed Swiss companies on our radar. To analyze them, we each concentrate on different sector groups with similar business areas. This research forms the basis of all our investment decisions for our Swiss equity portfolios. To avoid mistakes as much as possible, we adopt an in-depth approach.

What exactly does that involve?

We look into the companies from lots of different angles, ranging from business development and their financial situation, their market position and competitiveness, to equity-specific details. However, our research is not limited to Switzerland. Many of the companies based here operate globally. So we need to be familiar with the economic and political situation as well as the investment markets worldwide in order to gain a comprehensive picture. Ultimately, we use these wide-ranging studies to assess the value of each company. The more potential there is for the respective equity price to catch up with this value, the more attractive the investment candidate usually is to us. Getting these assessments right is crucial to our investment success.

Could you illustrate your approach with a specific example?

I'll let my team colleague Carla do that. Her responsibilities include the healthcare sector, so she covers companies in the pharmaceuticals, biotechnology, and medical technology sectors.

 

Discovering a new gene requires attention
to the smallest detail

 

Carla, what example would you choose?

Straumann, a player in the medical technology sector, is a good one. This innovative Swiss company, based in Basel, operates internationally in the field of dental implants and associated treatments. It has expanded significantly in recent years, and can now support every aspect of a dentist's work.

What are the latest innovations here?

Transparent braces for invisible teeth straightening and intraoral scanners are particularly popular innovations. The scanners allow digital rather than mechanical impression of the teeth in the mouth, finally freeing affected patients from the unpleasant gag reflex in the current procedure.

You seem to know a lot about the subject matter. Are you a trained dentist?

No, but I have a scientific background. I studied molecular biology and conducted research into processes in animal and human cells. While writing my doctoral thesis, I discovered a new gene that plays a part in animal and human development, and possibly also in the onset of cancer.

 

The best ones to analyze the subject
are those who understand it most

 

And now you're a financial analyst. Why did you make the switch?

I've always been interested in biology and medicine. In particular, I'm drawn to disease diagnosis and gene therapy. It's just that scientific researchers working solo face stiff competition. So I became increasingly eager to work in a team and get things done together. My internship at a bank, before my studies, taught me that scientists are much sought-after as financial analysts for the pharmaceutical sector because their thorough understanding of the companies' business enables them to analyze their true value more effectively. This is essential to identifying whether an equity is cheap or overpriced.

Has your wish been fulfilled?

Yes. In my current role, I can further my development in my specialist field, while also being an important cog in the investment process of the funds and mandates that our team manages. I gained the required financial knowledge from in-service training, and have been continuously expanding it for 12 years now as an analyst. Previously, at Vontobel's Investment Bank, I issued equity recommendations for external investors.

How do you gather your information on Straumann?

From publicly accessible financial data sources, annual reports, analyst presentations, or purchased research. Also from daily conversations with analysts from other firms. But I stay ahead of the game through direct visits to the company, including tours of the plant. In total, our team cultivates over 250 direct company contacts of this kind each year. This extremely valuable information source is not accessible to everyone. Industry trade fairs are treasure troves, too.

 

Exchange with experts on an equal footing
in an established network

 

In what way?

At these trade fairs, pioneering findings from research are exchanged and the latest products are presented for the relevant industry – in Straumann's case, at the likes of the International Dental Show, or IDS. This is the leading trade fair in the dental industry, and is held every two years. I went to Cologne for two days to attend it last March. It's a great place to meet dentists, medical scientists, the main product manufacturers, and service providers in the industry, in other words Straumann's competitors, as well as analysts from other financial institutions. Then my agenda is always full of appointments for revealing discussions on an equal footing with experts from my network, which has grown over the years. This allows me to keep pace with the researchers' progress, get a sense of what dentists want and compare this with the latest new products and services. These separate external views are valuable when it comes to a holistic assessment of Straumann's future prospects.

How are your newly obtained findings specifically applied to the portfolios managed by your team?

An example from EUHA, the international trade fair for hearing-aid acousticians, comes to mind here. It was last held in October 2019 in Nuremberg. A year previously, the Swiss hearing system specialist Sonova – formerly known as Phonak – from Stäfa in the canton of Zurich had unveiled its latest product at this event. However, the vast majority of the financial industry predicted that it would fail, causing a fall in the equity price. Talks with hearing-aid acousticians at the trade fair had persuaded me otherwise, and I advised our team to back Sonova, which had become cheaper. As expected, the product struck a chord.

And how did you benefit from this?

The price rose consistently, as the product was regarded as the year’s best in the industry. Accordingly, our portfolios geared towards Sonova saw an impressive increase in value. My team colleagues have now reduced the position in line with my latest advice. In my view, competitors are likely to make progress with innovative products that will put pressure on Sonova's leading position.

So you're away a lot. How do you balance work and family life?

My boss has let me reduce my hours to 80%. I spread them across five working days, which helps me to look after my two school-age children. At work, the mutual support in our team is invaluable. If anything important comes up, I'm within reach, and I'm also on hand for special assignments. Obviously, lengthy long-haul trips to Australia or Alaska, or the kind of intensive volleyball training that I did in my student days are no longer on the cards. But I can still go hiking and skiing with my family here, and I can even fit in a bit of fitness and yoga.

Do you have anything to add, Marc?

No, that's all absolutely fine. The only thing I would say is that assigning people where their strengths lie brings the best out of them. Carla was made for the pharmaceutical industry. The subject is right up her street, and her passion for it is evident. From experimenting with molecules, she picked up the accuracy that is so essential to financial analysis. She has never lost this, which is great. In addition, I know from experience that managing a family with school-age children as well as a job requires good organization and efficient working – especially if there are one or two business trips a month to contend with.

 

A well-balanced team delivers better results

 

One last question for you, Carla: How do you hold your own in this male-dominated industry?

Although women are few and far between in financial analysis, our small team has two female analysts. And there's no fighting either, although we do approach some things differently. I think the good balance within the team allows us to have wide-ranging, rewarding discussions with better results in many cases. To me, being good at something has nothing to do with gender. I certainly haven't discovered a gender-typical analyst gene yet. If I did, it would be the subject of my next research report.


 

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