Luck might run out for passive managers

You’ve been out here doing a lot of roadshows around New Zealand and you’re basing your presentation on the movie Moneyball. What's that about?

Moneyball is the story of the Oakland A’s – they’re a team that went on to have the longest winning streak in American League Baseball. It’s really just highlighting how they went about that. The reality is, they were a small club and they had a limited budget, so they had to think and act differently from other ball clubs. They basically had to find the mispriced ball players; in other words, the anomalies. That’s pretty much what we do in the investment world. If you want to be a successful investor, you have to be doing something that others are not. It’s really taking advantage of people’s focus on the short-term and other factors that produce these genuine long-term anomalies. That’s how we believe you can really add value to the longer-term.

Do you think PM Capital is a little bit like the baseball team?

It’s really more about highlighting that you have to think differently, and the patience and conviction that is required. Prior to that 20-game winning streak, they had quite a few losses and people had given up on them. One of the points we make in our presentation is the reason that you need patience and conviction in this game is because if you’re actually going to go back and look at every great investment you make over time, at the time of purchase, you’re always questioned and sometimes ridiculed. There’s an interesting clip in the film where just before they start winning, everyone has given up on them, and there’s one person in the stand holding a sign saying, “We’re still proud of you!” There was one person left, and then they went on and became the famous name.