Ten questions with Frank Villante, Chief Investment Officer with Celeste Funds Management

Welcome to Stockhead. Describe your job in plain language.

I analyse businesses, look at how they are priced and work out which are good and which are bad.

What skills and personality traits make a good portfolio manager?

A good portfolio manager needs to have people skills and empathy, be highly numerate and have balance and perspective. They also need to avoid hubris or arrogance and keep their ego in check.

A deep well of experience to draw from also helps.


What three things do you look for when investing in a company?

  • People — board and management (in that order)
  • Financials — specifically accounting quality
  • Business model durability 

What’s an important lesson you’ve learned when investing in small cap companies?

Don’t ever deviate from the investment process characteristics noted above and acknowledge that learning to be a better analyst never, ever stops.

What small cap stock picks are you most proud of?

I try to avoid back-patting about historic calls. The objective is to execute on our investment process and generate attractive returns for our investors over time.

What’s a common mistake among investors when investing in small cap stocks?

Not understanding the historic financial characteristics of a company, not questioning the assumptions behind the numbers and not coming to grips with the true integrity of provided financials.  

Which upcoming IPOs do you like, and why?

We don’t have a specific focus on IPOs. IPO assessment requires that the potential investor really understand if the fish on offer is for eating or for sale.

The small cap universe we can invest in is 500-plus companies so choice isn’t a problem. We don’t feel pressure to participate in IPOs. We suspect the IPO tsunami of 2016 and 2017 morphs to beach break in 2018.

Which stock market trend are you following closely, and why?

I am questioning whether movements in long-dated sovereign bonds are telling us something about how risk is priced, and in a more specific context, are we at the start or close to the end of the conversation? In my opinion I think the Bachman Turner Overdrive are particularly insightful in this context. As they said: “You ain’t seen nothing yet…”

 Which book should everyone read, and why?

Just one is hard. I can recommend The Travels of Ibn Battuta, accounts of a 13th century traveller who spent 27 years away from home. I think travel is important – it broadens the mind, and the ability to dream is important to the human condition.


Frank Villante is the Chief Investment Officer at Celeste Funds Management. Frank started his career in 1981 with National Australia Bank. From 1984 to 1988 he had roles as an Analyst/ Research Manager with Bridges, Son & Shepherd and later with Clark & Co (Citicorp Scrimegour Vickers) as an Analyst and Institutional Equities Dealer. In 1988 he joined the NRMA initially as an analyst, ultimately moving into a Portfolio Management role. Frank moved to Bankers Trust in 1995 as a Portfolio Manager where he had responsibility for large and small-cap portfolios until 2001. In 2002 Frank undertook consulting roles for  listed and unlisted companies, and was involved in two projects for ASIC. Frank joined Celeste Funds Management in January 2004 as Chief Investment Officer.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.