This week, we speak with Graeme Forster, a director at Orbis Investments Ltd., which has $34 billion in assets under management. Graeme joined Orbis in 2007 and is responsible for international equity and optimal strategies. Orbis has a unique corporate structure, owned by a not-for-profit foundation as the result of the original founder gifting its value towards philanthropy (similar to Rolex and The Guardian).
We discuss the firm’s unique fee arrangement: For institutional accounts of $100 million and up, they pay a base fee 33% of outperformance versus the benchmark (and no management fee). When they underperform, they refund as much as 25% of their performance fees. Orbis partners are the single largest investor group in their own funds, paying the exact same fees, making them fully and unusually aligned with their clients. The firm has outperformed its benchmarks by an average of 3% per year since inception.
The firm’s investment strategy is “differentiated thinking” primarily focused on equities. Orbis looks for overlooked companies, where the crowd has lost interest. They then apply their intensive intrinsic value analysis to the company to identify the underlying value.
A list of his favorite books is here; A transcript of our conversation is available here Tuesday.
You can stream and download our full conversation, including any podcast extras, on Apple Podcasts, Spotify, YouTube, and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here.
Be sure to check out our Masters in Business next week with Bethany McLean, contributing editor to Vanity Fair, and author of Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron. Her most recent book is The Big Fail: What the Pandemic Revealed About Who America Protects and Who It Leaves Behind, was coauthored with Joe Nocera.
Previously:
MiB: Adam Karr, Orbis Investments (January 16, 2021)
Why Pay Alpha Prices for Beta? (May 9, 2018)
Graeme Forster’ favorite books
The Theory of Poker: A Professional Poker Player Teaches You How To Think Like One by David Sklansky
Against the Gods: The Remarkable Story of Risk by Peter Bernstein
The Power of Gold: The History of an Obsession by Peter Bernstein
Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets by Nassim Nicholas Taleb
The Alchemy of Finance by George Soros
Investment Biker: Around the World with Jim Rogers by Jim Rogers
Rogue Trader by Nick Leeson
Bad Blood: Secrets and Lies in a Silicon Valley Startup by John Carreyrou
Books Barry Mentioned
Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts by Annie Duke
The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing by Michael Mauboussin
