Featured Profile: Louis Christopher
Finding alpha in research
Behind every successful business is a story of grit, perseverance and self-belief. The owner of SQM Research, Louis Christopher, tells Karren Vergara how he created a well-respected and profitable investment research house from humble beginnings.

At about five-years-old, Louis Christopher remembers visiting the old Sydney Stock Exchange with his grandfather and witnessing the open outcry system.

A room full of stockbrokers yelling at each other left him a little perplexed, yet whatever they were doing seemed like a lot of fun, and his curiosity about investment markets grew from that point onwards.

Not many can say they have built a business from scratch not relying on any external investors.
Raised by grandparents on his mother's side, Christopher says losing his parents at a young age forced him to be self-reliant.

He credits his grandfather, who was a World War II veteran, and an accountant by trade that loved the share market and "left financial reports all around the house", as having a big influence on his life to this day.

He adds that he is a proud supporter of Anzac Day and intends to give more to charities such as Legacy, The Emerge Foundation and other charities dedicated to orphans.

His grandfather was also a property investor that had a "love-hate relationship with property."

Christopher recalls the hard times his grandparents had with tenants who trashed an investment property or were burnt on a deal.

"From those experiences, I think on the property side, one thing I always wanted to do was improve the level of property information out in the market place to the level where it's the same as you get in the share market," he says.

"That's always been a deep passion for me through seeing my grandparents getting ripped off on property and I think that really stuck with me."

His interests in investment markets led to a business degree majoring in accounting with economics from Griffith University.

During university, he dabbled in the share market, trading shares and naked put and call options - he even bought his first property on the Gold Coast for $500,000.

His practical experiences with shares and property at such a young age made him realise there was a "dire need in the market for really good impartial information."

Christopher landed his first job out of uni with MLC, and it eventually led to an assistant editor role at the Securities Institute of Australia where he was technical editor in charge of the accuracy of course notes and managing a team of volunteers.

Moving to Australian Property Monitors (APM) in 2000 was a turning point for Christopher; it was also a time when his profile began to grow in the media.

APM provided all the sale transactions of residential property across the country, yet at the time, there wasn't great statistics out there for people to use, Christopher says, adding house price data was "scratchy" and only "suboptimal indexes" were available.

Looking back on his career history, Christopher notes he has always been attracted to smaller companies, which helped in venturing out and establishing his own business.

While managing a joint venture in 2006, Christopher was running SQM Research on the side. What started out as an idea and a dream soon grew to be a successful small business of 11 people.

In 2010, the firm reached a key milestone when Christopher bought out the property ratings business he was operating on behalf of van Eyk and moved it and the team under SQM Research.

It started out as a business providing property-related data to the market and has since grown into a ratings research house and a fund data supplier.

"We've just completed off another financial year and we've had our fourth straight year of double-digit revenue growth, which is fantastic," he says.

What's noteworthy was his ability to grow SQM Research without the need for external capital, which he points out, has been important in the company's development and ability to make quick decisions.

The company has since grown incrementally, taking one milestone at a time.

"We're not interested in getting a whole bunch of quick capital in the business to grow crazy, but we are growing very well now," he says.

Just as life is "a bit of a marathon", Christopher perceives his career and company goals in the same way and intends to keep driving this business for the next 20 years.

The road to becoming a successful business is not easy and many will give up early, "especially when the chips are down," he says.

"There have been plenty of times when I could have walked away from SQM. I am so glad I didn't."

SQM Research could have sunk when van Eyk went into administration, he says, yet it proved to be "a great opportunity during a very scary and stressful time."

"Not many can say they have built a business from scratch not relying on any external investors," he says.

He is also proud of his two young daughters.

"Raising a family with my wife is as challenging and equally rewarding as building a business," Christopher says.

He adds property data and active fund research are the key offerings SQM Research delivers to its target market of advisers, particularly boutiques and IFAs looking for a complete solution.

"Before a financial adviser can recommend a financial product, they need research and that's a compliance thing if anything else and we fulfill that function," he says.

SQM Research provides the same service as its peers Zenith, Lonsec and Morningstar, but has a leg up in terms of its ability to offer property valuation, he notes. By the same token, CoreLogic provides property data, information and analytics but doesn't offer funds research.

"We believe that we're hitting the spot there; we're providing a one-stop shop service for financial advisers," he says.

The firm will shortly launch a direct equities research offering.

One thing that's lacking in the market is coverage of the up-and-coming managers, which Christopher says have the greatest potential to deliver alpha for advisers.

"There are a number of advisers, particularly goals-based investment advisers and other dealer groups, who do recognise there's still a future for active managers to follow our research," he says.

"A minority of managers do achieve that alpha consistently over time, but these are managers you can find if you do the research.

"You can actually get to the bottom of why they're achieving the alpha and if it's based on sound investment principles, then it's very likely you've found a manager that's going to deliver alpha in the future as well."

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