Stockholm (NordSIP) – For many professional investors in the Nordics, Skagen’s annual January conference marks the unofficial start of the new year. Time and time again, the legendary event gathers an impressive line-up of speakers precisely at a point of time when financial professionals are most open and thirsting for inspiration, new ideas, faith, and hope. That is exactly what Skagen’s chairman, Timothy Warrington, promises to deliver to the hybrid audience attending the conference in person in Oslo/Stockholm and online this 10 January. A mix of traditional and innovative elements, the event certainly lives up to Warrington’s ambition for it to “age with dignity.”
The theme chosen by the organisers for 2024, Finding Alpha Beyond the Noise, is broad enough to accommodate a number of different and differing opinions. Between Chris Miller’s epic account of the decades-long battle to control microchip technology and Keyu Jin’s bold attempts to dispel some persistent myths about the Chinese economy, the morning sessions do not disappoint. Meanwhile, the afternoon looks even more promising, featuring, among others, two prominent Financial Times columnists – the infamous former Head of Sustainability at HSBC, Stuart Kirk, and associate editor Rana Foroohar, who is also CNN’s global economic analyst. Representing the investment community alongside Skagen’s own portfolio managers, Jonas Edholm and Michael Gobitschek, are two true veterans of the industry – Russell Napier and James Anderson.
At the end of a truly inspiring day, what leaves the strongest impression are the thoughtful and refreshing comments delivered eloquently and humbly by James Anderson. Currently a Managing Partner at Lingotto LLP and Chairman of Swedish investment firm Kinnevik, he is perhaps best known for the almost four decades he spent at Baillie Gifford, where he helped turn the Edinburgh-based private partnership into an unlikely star of tech investing through early bets on the likes of Tesla and Amazon.
“Let my dataset change your mindset,” starts Anderson, quoting one of the people who have inspired him throughout the years, Hans Rosling. He then proceeds to express his profound disenchantment with modern financial theory and concepts such as alpha, beta, and Sharpe ratios. Anderson provides some academic evidence confirming his empirical observation that investment outcomes depend on a tiny number of exceptional stocks. According to him, an active fund manager’s role is to try and identify these superstar investments as early as possible rather than constructing a broadly diversified portfolio at some level of volatility risk relative to an index.
Growing up in a family of physicians, Anderson knows that if most doctors tell you something, the odds are that they are right. The situation in investing is different, according to him. If most investors hold something to be true, it is probably wrong, or it is too late to put your money into it. He rails against what he calls the ‘professionalisation’ of investing. “There are too many CFAs in the world,” jokes Anderson, suggesting that there might be more useful curriculums for prospective investors to adhere to. His advice is to talk to the greatest thinkers rather than to stockbrokers when looking for investment ideas. “I am so bored of discussing what the Fed’s next move is going to be,” confesses the investment guru, lamenting our industry’s increasing short-termism.
Anderson’s message is at its most potent when he delves into his “modest ambitions for our industry.” According to him, the purpose of investing should be to solve problems. This requires a fundamental understanding of the problems themselves as well as the exponential forces that are driving the solutions. “Invest in great companies that advance the world,” urges Anderson. “This won’t guarantee you returns next year, but who cares.”
