Business
“The cookie cutter nature of the fund management services industry (accounting, administration, legal, tax, information technology and so on) means that those attempting to break from the status quo come across more than their fair sh are of excuses.”
“We are very respectful of the trust existing partners have placed in our ability to compound their savings and have no appetite to pack in all and sundry, regardless of the incentives.”
“Non-transitive dice offer two handy investment models: first, just as any dice can win for a while, so any superiority an investment process may have will only emerge with time, so patience is important.”
“In a traditional capital cycle framework, the high valuation of [oil service companies] encourages a supply side response, which eventually undermines the economics discounted in the stock price.”
“Indeed, human nature being as it is, we can almost guarantee that capital spending will continue to grow until share prices decline.”
“By looking out five years we do not have to invest in shorter-term phenomena in order to look good this year.”
“Where is today’s anti-bubble? Perhaps in large high quality growth businesses that appear cheaper to us than for many years.”
“Philosophically our position is that the management fee should not be a profits centre (although a small surplus float is prudent).”
“As the Partnership grows in size the management fee will decline as a percentage of assets and, that way, all investors share in the natural scale economics of the operation.”
“The performance fee also needs addressing, as there is an inconsistency between multi-year investments, multi-year orientation by investors and an annual payout for the manager!”
“The performance fee should be appropriately calculated for the job, be at risk for subsequent poor performance and reflect the cost of capital.”