#2 – The Risk Taker: Stuart Roden discusses his investment philosophy.
Stuart Roden achieved spectacular success in managing money, yet he is an incredibly modest and humble guy. If you met him, you probably would have no idea how successful he has been. This interview for me was packed full of wisdom and great advice. I hope you enjoy it and learn a lot – I certainly did.
SUMMARY
In this fascinating interview, Stuart Roden, former Chairman of Lansdowne Partners, explains the 5 keys to a successful fund, how his 25 year partnership with Pete Davies produced one of the most successful hedge funds in the UK and how now managing venture capital is a different, yet similar, game.
INTRODUCTION
I have known Stuart for over 25 years but I learned more in this hour about his philosophy than I had previously. He has that winning combination of a razor sharp intellect, a love of markets, a wealth of experience and a nose for a winning idea.
In this interview, we hear how he was tempted to fire a client, the 5 key factors to run a successful fund, why you are either an analyst or a portfolio manager, how handwriting can reveal whether you will be a good employee, and how he and Pete Davies ran an incredibly successful $10bn hedge fund. I know you will enjoy listening to this as much as I enjoyed recording it.
GETTING INTO INVESTING
Stuart has a love of gambling – he used to play a lot of poker at school and spent the summer at the racetrack.
FIRST SHARE
He bought his first share age 13 – Acorn, the computer company. He has always been attracted to risk.
RUNNING A SUCCESSFUL HEDGE FUND
When he and Pete Davies started their hedge fund, they believed that the written communication to clients was extremely important, and they were always very clear about what was happening. Nobody likes surprises and clients really like unpleasant surprises, especially if there is thesis drift.
ANALYSTS ARE VERY DIFFERENT FROM PORTFOLIO MANAGERS
Analysts want binary answers. The skill of a great portfolio manager is taking on uncertainty and risk. It’s much easier to interview analysts – give them a difficult case study. With a PM, it’s an attitude, how they think about the world.
LIFE AFTER FUND MANAGEMENT
Being a good investor doesn’t equip you for anything else afterwards. And it can make you impatient and frustrated as there are few other endeavours where you can make things happen so quickly and then turn on a dime to pivot.
CONCLUSION
This was a fascinating discussion with a huge amount of wisdom. I don’t think anyone could come away from this, no matter what their level of experience, without learning something. I know I learned a lot.
ABOUT STUART
Until January 2019 Stuart was Chairman of Lansdowne Partners and Chairman of the Management Committee having previously co-managed the Developed Markets funds since their inception in 2001.
Stuart is non-Executive Chairman of Hetz Ventures and non-Executive Chairman of Tresidor Investment Management.
He is Chairman and Founder of UP: Unlocking Potential, a trustee of The National Gallery and The Centre for Social Justice and is a member of LSE Council.
Stuart started his career in the City in 1984, joining SG Warburg & Co, he worked at McKinsey and prior to joining Lansdowne in 2001, was a Managing Director of Merrill Lynch Investment Managers.
Stuart received a first-class honours degree in Economics (BSc) from the London School of Economics.
BOOK RECOMMENDATIONS
The Education of a Poker Player Ishi Press
And try to read investment letters – what are good investors buying and why? Some of Buffett’s letters, the greatest ones are in the past.
HOW STEVE KNOWS THE GUESTS
Steve has known Stuart since he was at Mercury Asset Management and was one of his top 5 clients when Steve was on the sell-side. When Stuart and Pete Davies moved to Lansdowne, they became Steve’s nr 1 client, and Lansdowne Partners was one of Steve’s first clients at Behind the Balance Sheet. Steve is also invested in some of Lansdowne’s funds.