Tim Samway, institutional sales director with Hyperion Asset Management, a Pinnaclebacked boutique, experienced this “low level of agreeableness” from good managers in his previous days as a broker with Wilson HTM. “I found that when I was in broking. You’re selling in a room full of funds managers what you think is a really great story, and you’re getting all these stares back. And you’re thinking to yourself: ‘Why aren’t they buying!” Because they’re cautious. Managers want solid information but not the guff that comes with it.
“They’re very focused,” Macoun says. “It demands their whole thinking and their lives because they know how easy it is to get it wrong. “They know that at the end of the day only a fairly modest proportion of the companies they invest in will actually deliver what they need. So they start with the presumption that there are holes in the story.” It’s a case of guilty until proven innocent: being sold a dog story is regrettable, “but it’s just as big a mistake to reject a company that does great”. “They won’t tolerate any crap that might get in the way of really analysing and getting to the bottom of a company’s prospects.”
The passionate ones
“Passionate” is the word that Paradice circles back to as he describes the traits of good investors. They exhibit an “insatiable appetite” for stocks. It’s evident in the analyst who turns up for work on Monday with a better interpretation of a company’s prospects after reading annual reports and other materials the day before. Sevior says passion is a fundamental part of any good manager. “I regard that as part of the package for anyone in any discipline in life. To perform at the elite level you’ve got to have an intense passion for whatever the task is. Investing is no different.” But even the strongest passion for investing won’t guarantee success. “What is passion? You can’t do anything with it?” Dougherty asks.
There are plenty of managers who are very interested in financial markets and love turning up to work. “But it’s not enough to be passionate and to love investing. I’ve met a lot of passionate people who’ve made very big errors. It’s not the determinant of a great investor.” After hearing, time and again, from managers driven by passion, Dougherty and his team began researching passion – to find out what it is, and how it influences a person’s work. In turns out that these impassioned managers are among the workforce’s most fortunate participants. In The Power of Passionate Creatives, researchers John Hagel III, John Seeley Brown and Lang Davison find that, in the United States, only one in five people is really passionate about their work.