Viking Global's Andreas Halvorsen: Rare Interview on Investment Process ~ market folly

Monday, February 25, 2013

Viking Global's Andreas Halvorsen: Rare Interview on Investment Process

Viking Global's founder Andreas Halvorsen spoke at the Milken Institute where he shares wisdom on investment process and numerous investing topics.  This is a rare opportunity to learn from this hedge fund manager.

On the importance of management teams:  He says that good management teams are extremely underappreciated in their ability to take market share, even in low growth environments.  He equally believes poor management teams are underappreciated in that they can destroy things quicker than you think.

On short selling: "It's a heartwrenching activity, because you can lose a lot of money doing it."  He says you can't short a bunch of underperforming stocks because the risk is too high if you're wrong.  And when you are wrong, "you have to get out very quickly, which means you can't have very large positions."

On Viking's approach to investing: They start by looking at industries/sectors and talking to competitors, suppliers, etc.  He talks with management to see how they think about the competitive dynamics of the industry.  He likes to bet on a management team that has a view of the underlying dynamics similar to what Viking believes.

On hedge fund fees:  He said he is fascinated by investors' focus on fees, arguing that they should instead be focusing on the net return after fees.  While he is obviously biased here since he runs a hedge fund, he make a very good analogy, comparing fees and returns of funds to expenses and revenues of any business: Index funds all have the same revenues (return) while they have different expenses (fees).  Active managers, on the other hand, have both different returns and different fees.  So focusing just on the fees doesn't make sense.

On patience:  Lastly, Halvorsen also harped on the value of having patience. He says you have to have patience in any business, and hedge funds are no different.

This is a fantastic interview and we highly recommend watching it in its entirety.  Embedded below is the video with Viking Global's Andreas Halvorsen:

To see Viking's latest portfolio, check out the brand new issue of our Hedge Fund Wisdom newsletter that was just released.

blog comments powered by Disqus