Advertise on podcast: Far From The Finishing Post

Alastair Unwin is a fund manager on Polar Capital’s Technology team.  We discuss Alastair’s career as a technology investor, AI’s exponential curve of improvement and potential as a general purpose technology, as well as the issues that investors should consider as ever more capital is spent to realise AI’s promise. Show notes: [01:33] Alastair discusses how he got into investing [03:14] Lessons from Herald, Neptune and Polar [05:05] Heuristics for technology investing [07:29] AI scaling laws [10:10] AI bottlenecks [13:45] Capital formation and AI’s new infrastructure [17:42] A hardware cycle [19:37] Motivations for increasing capex [25:08] Capex in the context of improving models and the global wage bill [28:49] Increasing circularity of AI financing [31:14] Is it winner takes all or will models be commoditised? [33:34] Nvidia and the depreciable life of chips [37:52] Hyperscalers’ ability to win in the new paradigm [40:32] Alphabet’s prospects [44:21] Adoption rates and use cases [49:03] Sitting with ambiguity and not being dogmatically convicted

Sebastian Lyon and Charlotte Yonge co-manage Personal Assets Trust  and Troy’s Multi-Asset strategy.  We discuss the strategy’s evolution over the last 25 years, Troy’s equity-centric approach to multi-asset investing, and why creating a resilient portfolio is as relevant as ever in today’s world. Show notes: [01:34] Founding philosophy [04:21] Avoiding complexity [07:25] Reasons for not owning derivatives [08:45] Charlotte’s career [10:41] Becoming co-manager [12:35] How Sebastian and Charlotte complement each other [16:43] Avoiding wasting assets [19:19] Finding opportunities with asymmetric risk [21:44] Hubbell and Verisign [24:45] Evolution of fixed income investments [27:08] Shortening of duration [31:00] Will the US$ remain a safe haven? [34:55] Attractions of the Japanese Yen [36:11] Gold as essential portfolio insurance [38:44] Does the macro impact asset allocation?

Seth Brennan is co-founder of Lincoln Peak Capital, which owns minority stakes in several asset management companies, including Troy. We discuss Lincoln Peak's long-term partnership model and the importance of autonomy and a strong alignment of interests as foundations for success. Show notes: [01:15] Seth discusses how he got into the industry [02:49] Joining Affiliated Managers Group [03:43] Lessons from AMG [06:37] Setting up Lincoln Peak [07:51] Starting a business in 2008 [10:01] The importance of having long-term capital [14:10] Lincoln Peak’s long-term ambitions [16:20] Exits [18:51] The due diligence process and reasons for a transaction [22:53] Importance of autonomy and alignment [25:01] Adding value to partner firms [28:26] Avoiding the temptation to intervene [31:52] Continuing relevance of active management [34:44] Catalyst for Troy transaction [35:35] Why Lincoln Peak is a good partner for Troy [37:14] Sebastian’s strengths as an investor [38:35] Be curious and ask questions

Matthew McLennan is co-head of First Eagle’s Global Value team and one of the portfolio managers of Global Value, a strategy that has delivered strong long-term compound returns.  We discuss the importance of humility and patience, why resilience is emphasised throughout the portfolio, and how Global Value has survived and thrived across a broad range of market environments.  Show notes: [01:24] How an unusual childhood informed Matt’s approach to investing [03:52] Succeeding Jean-Marie Eveillard [05:46] Continuous refinement of the investment kernel [07:04] Successful succession planning [09:45] Sustaining success over different market cycles [12:15] Important character traits and attributes [17:01] Impact of passive investing [19:20] The benefits of having a Senior Advisor Board [22:09] What value investing means to First Eagle [26:38] Endogenous integrity with the capacity to suffer [28:40] Discerning between secular change and noise [33:44] Approach to asset allocation [35:46] Benefits of owning gold [37:45] Role of cash in the portfolio [40:11] High valuations and prospective returns [42:51] Gold miners vs bullion [44:41] Understanding the process of growth and the role of endogenous confidence cycles

Gabrielle Boyle and George Viney co-manage Troy’s Global Equity strategy.  We discuss why the market persistently underestimates the compounding power of rare and exceptional companies, the importance of recognising one’s biases and striving to learn and improve as investors, and why Gabrielle and George work so well together as a team.  Show notes:  [01:26] Why the market persistently underestimates the compounding power of rare and exceptional businesses [02:41] Companies don’t compound in a linear way [05:09] Having the right environment to sustain success [08:55] How Gabrielle and George complement each other [10:35] The importance of having an inner critic [12:45] Continuous improvement [14:24] Combining resilience with reinvestment potential [16:10] Characteristics of special businesses [18:35] Sell discipline [20:41] Minimising biases and ensuring accountability [24:39] Balancing strong operational performance with fair valuations [27:32] A concentrated portfolio with broadly diversified businesses [29:17] Troy’s broader team [30:57] Cognitive diversity with shared values [33:04] Confidence in the future [34:29] Back your conviction

Dan Davidowitz is lead portfolio manager of Polen Capital’s Focus Growth strategy.  We discuss Dan’s evolution as an investor, Polen’s investment guardrails, and other factors that have helped the strategy deliver exceptional returns over the last 35 years. Show notes: [01:16] Dan discusses how he pivoted from public health to investing [02:56] Thoughts on healthcare investing [04:30] Shifting from a deep value shop to Polen Capital [07:44] Keep things simple [10:01] Time arbitrage with businesses that are the best-of-the-best [12:12] Creating a high performance investment team [14:23] The importance of being both optimistic and open-minded to change [16:34] Getting better each day to remain competitive [17:59] Polen Capital’s evolution [20:40] Polen’s investment guardrails [22:14] Vigilance and conservatism for continuous compounding of earnings growth [24:35] Making sure companies are investing adequately for their future [26:34] Acquisition-driven companies [28:45] Investing across the growth spectrum [31:17] Having a broad mix of competitively-advantaged businesses [33:51] Valuation discipline [36:45] Lessons from the last few years [38:30] Impact of GenAI [41:03] Why Amazon is a large holding [45:35] Building any experience is good experience

In this episode we speak to Robbie Robertson.  Robbie is on the Board of Personal Assets Trust and spent a nearly 40-year career in the investment trust industry.  We discuss the evolution of the investment trust industry, the advantages of a closed-end structure and the role Personal Assets Trust can play in a portfolio.    Show notes:  [01:28] A different world  [03:17] Observations from a career in the investment trust industry  [06:42] Characteristics of successful investors  [08:03] How Robbie got involved with Personal Assets Trust  [09:03] Advantages of the investment trust structure  [11:39] Evolution of the investment trust industry  [15:05] Impact of higher interest rates and a changing cycle  [16:48] Are they investment trusts or operating companies?  [20:54] Valuing assets in newer parts of the market  [22:24] Appropriateness of the investment structure for alternative assets  [23:57] Is there demand for general equity investment trusts?  [25:51]  Why some investment trusts scale and others fail  [27:25] Common pitfalls to avoid  [28:57] Trading discounts  [30:50] What makes a great investment trust Board?  [32:58] The role Personal Assets Trust plays in a portfolio  [37:56] Advantages of a discount control mechanism  [39:36] Why most Boards do not commit to a discount control mechanism  [40:47] Enjoy yourself

In this episode we speak to Jim Strang, Chairman of HGCapital Trust.  The Trust has an outstanding track record investing in business-to-business software companies.  We discuss the evolution in private markets over Jim’s career, the benefits of specialisation and the reasons behind Hg Capital’s success. Show notes: [01:15] Jim discusses his early career [02:12] HgCapital Trust’s history [03:41] The benefits of specialisation [05:56] The importance of controlling the capital structure [08:02] Characteristics of typical Hg investments [10:07] The growth model [11:29] End market fragmentation [13:29] Being highly selective [16:25] Having the flexibility to own the best businesses over the long run [18:07] Replicating Hg’s success in the US [19:58] Why Hg is an attractive owner for entrepreneurs [22:35] Sustaining Hg’s culture and using greater scale to drive operational improvement. [25:25] Objectively assessing each company’s potential [27:03] Low loss rates and a few major successes [27:57] Why things typically go wrong [30:22] Leverage and the capital structure [33:33] Valuing private companies [38:43] M&A in a higher interest rate environment [40:54] Trust your gut

Stuart Widdowson founded Odyssean Capital, is co-manager of the Odyssean Investment Trust, and has a wealth of experience investing in UK-listed smaller companies.  We discuss the lessons Stuart has applied to public equity investing from his days in private equity, the rewards derived from investing in good quality companies that can be improved, and the overall state of the UK market.  Show notes: [01:28] Stuart discusses his early career [04:12] Swapping private equity for public equity investing [06:11] The market imperfections in small cap investing [07:44] A focus on global niche market leaders [09:35] Stuart’s ambitions for Odyssean Capital and its cultural values [11:51] The meaning behind the Odyssean name [12:49] The benefits of concentration [14:25] Managing risk and avoiding bad businesses [16:41] The quality attributes Stuart looks for [19:38] Pattern recognition in TMT, healthcare, specialist industrials and services [22:18] Being cycle aware rather than trying to time cycles [24:18] The role of static and dynamic valuation [28:20] Managing for liquidity [31:27] Identifying companies with the potential for self-help [34:15] Backing people and focusing on what is fixable [36:05] Being credible when engaging with companies [39:37] The structural headwinds facing UK equities and the valuation opportunity [43:16] Contrarians come in first [44:18] Navigating a higher cost of capital [47:20] Find out what you enjoy and are good at and get a good mentor

In this episode we speak to Oddbjørn Dybvad, co-founder of REQ Capital, an Oslo-based investment firm.  Oddbjørn manages REQ’s Global Compounders and Nordic Compounders funds, which focus on acquisition-driven businesses.  We discuss the entrepreneurial energy within these companies, why they are able to reinvest capital at attractive rates for a long period of time and how their diversified and decentralised nature makes them both resilient and adaptable.  Show notes: [01:22] Oddbjørn discusses his career [02:26] The risk and return characteristics of acquisition-driven compounders [04:25] The influence of geography [07:01] Defining the different types of serial acquirer [09:12] Focusing on small/mid-caps with a long runway for redeploying capital [10:41] The diversification benefits of acquisition-driven companies [12:11] A preference for insider ownership, decentralisation and acquisitions funded by cash [13:29] Communicating with investors in a different way [14:53] Key person risk and the sustainability of culture [16:28] Change at Diploma [18:07] Harnessing entrepreneurial energy through decentralisation [20:43] Decentralisation and adaptability [21:59] Motivating behaviour through simple incentivisation structures [24:52] Focusing on track record and management [25:56] Constellation Software and the decentralisation of capital allocation [28:07] The valuation differential between public and private markets [30:51] The attractions of selling to acquisition-driven compounders [33:06] Looking for the dual engine of organic and inorganic growth [35:04] The underlying characteristics of REQ Global Compounders [37:13] Becoming more conscious about evaluating risk and management [39:07] Finding people who are process-oriented and have a long-term mind-set [39:55] Learn from your mistakes

Kiril Sokoloff founded 13D Research in 1983 and is a leading global investment strategist who has presciently called a number of major paradigm shifts over the last 40 years.  We discuss Kiril’s career, why the current investment backdrop is so challenging and how the geopolitical landscape is evolving. Show notes: [01:23] Kiril talks about the start of his career [04:18] Getting the big picture right [07:48] The impact of algorithmic trading and passive investing on price discovery  [09:57] Timing is everything [10:48] Risk control and being willing to change your mind [12:39] The common traits of successful investors [14:44] Reading widely to connect the dots [15:41] Why the investment environment is so challenging [19:18] The lag effect giving the illusion that everything’s fine [21:14] The role gold plays in a portfolio [24:19] The cycle of wealth distribution [25:54] Cycles  go from one extreme to the other [26:45] Focusing on cash flow and low free cash flow multiples [28:23] Supply and demand imbalances in the energy and mining industries [30:47] Resource nationalism [32:21] A changing market regime [33:35] Drivers of higher inflation [37:33] Geopolitics and the shift to a multipolar world [40:21] Investing in China [42:15] Accepting fate whilst being flexible and patient

Prashant Khemka has a strong track record managing capital in India and global emerging markets. He established Goldman Sachs Asset Management’s India franchise in 2006, was lead portfolio manager of Goldman’s India Equity and Global Emerging Market Equity strategies, and in 2017 founded White Oak Capital Management, where he has continued to deliver impressive returns.  We discuss Prashant’s investment philosophy, how to build a high performing team, why investing is similar to elite sport, and the attractions of investing in India. Show notes: [01:27] Catching the investment bug [04:04] Prashant’s early career [06:16] Learning from a mentor [08:10] Building a strong investment culture [10:25] Having an elite performance mentality [13:02] The key attributes of good stock pickers [14:39] India is an alpha rich market [15:46] The importance of good governance and a strong rule of law [17:55] India’s equity market is becoming more efficient but it takes time [20:26] India’s economic strength provides a solid foundation [22:24] Growth is a function of change [25:04] Investing in great businesses at attractive valuations [29:10] Emerging market private sector banks offer more profitable opportunities with lower risk [32:44] Indian equity valuations relative to history [36:41] Growth is a critical component of the value equation [38:47] Spend more time with family and focus on learning what you love

Paul Major co-manages the Bellevue Healthcare Trust and has a wealth of experience of the healthcare industry.  We discuss how healthcare has evolved, why existing healthcare systems are fundamentally challenged, and the approach Paul takes to investing in the industry as a result. Show notes: [01:15] Paul discusses how he got into finance [03:15] Bellevue [04:31] General lessons for healthcare investing [06:01] Delivering innovation and why R&D doesn’t scale [10:07] Focusing on the key problems society faces [13:48] Keeping healthcare investing simple [16:47] Why the healthcare system is broken [19:53] Finding productivity gains [22:07] Preventative medicine [24:12] Fixing a problem that didn’t previously exist [29:02] The US healthcare system [32:03] Transition to value-based care [33:45] Constructing a portfolio of innovative companies [36:59] The fast moving pace of healthcare innovation [39:13] Understanding what innovation looks like [39:37] The importance of educating physicians [40:56] Valuing young, innovative companies [45:47] Corporate finance provides an excellent education

Blake Hutchins manages the Trojan Income Fund and is co-manager of the Troy Income & Growth Trust.  We discuss the changing investment environment, why it could be good for high-quality, dividend-paying companies, and where Blake is finding value in the UK market today. Show notes: [1:16] Being deliberate and patient during tough times [3:30] Equity income investing in a different environment [6:50] Striking the right balance between yield and dividend growth [9:38] Why Blake doesn’t invest in banks and commodity businesses [13:31] The power of incumbency [16:27] The impact of higher inflation [18:33] UK equity valuations [21:30] UK domestic exposure [23:58] How the portfolio has evolved [25:39] The attractiveness of UK-listed consumer staples companies [27:34] Dividends are on a more stable footing following the pandemic [30:31] Growing the dividend in a resilient and consistent way

Swetha Ramachandran manages GAM's luxury brand strategy and knows the luxury industry inside out. We discuss Swetha's definition of luxury, the pre-eminence of European brands, the rise of China and how the industry is evolving.    [01:05] Swetha discusses her early career  [03:01] Luxury is changing and widening  [06:13] Defining luxury  [07:53] Sizing the luxury market  [09:10] Characteristics of a luxury shopper  [10:59] The role of gaming and online in attracting younger consumers  [13:37] Why European companies dominate the luxury industry  [16:28] Chinese consumption  [20:16] Trend of buying less but buying better  [22:10] Importance of supply chain transparency  [23:24] How the rules of the game differ to the broader consumer goods sector  [25:30] Luxury companies can't simply rest on their laurels  [28:21] US brands typically haven't built as much brand equity  [29:29] How big can luxury brands become before they fail to deliver promise of exclusivity  [30:42] Gaining confidence in the brand permanence of younger companies  [33:19] Family ownership and the benefits of taking a long-term view  [34:47] Online has supported rather than disrupted luxury brands  [36:31] Luxury resale hurts aspirational luxury brands but helps top tier brands  [37:42] Have luxury companies been too aggressive with pricing?  [39:50] Valuations and the opportunity set today  [42:28] Are luxury goods companies now more sensitive to recession?  [43:50] There's no such thing as a stupid question