But while idea generation, confidence and purpose are core parts of funds managers, they must be tempered by humility. Arrogant investors aren’t just pains to work with. Their know-all attitudes can stop that essential probing for new information and insights. “Investors shouldn’t be opinionated,” Paradice says. “If someone’s opinionated in a company meeting, the management will tell them what they want to hear.” Good investors keep management talking. “Don’t interrupt them. You need to let that train of thought come out. You don’t know what they’re going to say next,” he says. The next sentence might yield new information about the company, or provide a different way of looking at it. A “good listener” himself, Paradice jots questions down in the margins of his notebook during company meetings. He’ll put them to management later, after they’ve stopped talking.

His most recent recruit, Kevin Beck, formerly of US manager Artisan Partners and now the Denver-based portfolio manager of Paradice’s global small- and mid-cap equities fund, exhibited these qualities. “He’s a good listener, and he looks at stocks in the right way,” Paradice says straightforwardly. Beck also shuns largesse. “He comes over in economy class, and puts staff in some hotel worth $60 a night, so you know he’s all about doing everything in moderation, and being conservative.” Paradice likes to hire “humble people (who) are focused and have an insatiable appetite for learning about a stock,” rather than “someone who wears flash suits and who’s got a big wine cellar they always boast about”.

As investors absorb volumes of information, they must discern shards of truth from spin. “In my 25 years as an investor, I’ve been lied to so many times,” Sevior says. “It’s important to tell who’s telling the truth and who’s not. You need your own analytical tools, particularly in these days where the media is managed and there is the concept of CEO as salesman. It’s good to get behind that façade and into the bowels of the organisation to where the real people are.” But it would be a mistake for a manager to develop a cynical outlook about investing. “Super pessimistic people probably don’t make the best investors throughout the duration of the cycle.” Sevior advocates a healthy scepticism balanced with curiosity. “Wherever you are in the cycle, there are always opportunities. You’re curious, and you bring a disciplined approach to sorting what’s real from what’s not.” Each situation is different. Investors must adapt.

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