Inspired by Warren Buffet and Charlie Munger and an avid student of them as I am, I often use the phrase:
one of the easiest ways to make money is to think longer term than the next guy
With that I often refer to “patient capital” and am, my bias I admit, openly skeptical of Private Equity and Venture Capital and their (to me) short term timeframes for investment, though I note that I am skeptical yet open and have met a number of “patient” investors in those spaces too.
Well, today I am reminded of Sir Angus Grossart, a very wise man and at or close the top of any short list of the greatest investors ever in Scotland.
I was fortunate enough to meet him at a dinner in 2019, at which I talked about the value of being patient, to which he then said to me: “Patient Capital – is not long term enough“. The post behind that link was written the day after a dinner where the focus guest was the CEO of one of Scotland’s industrial success stories, Alexander Dennis, manufacturers of buses and other commercial vehicles. Sir Angus was there that night simply in support of his CEO.
Sir Angus co-led a rescue of that company back in 2004 and owned 33%, but as I and others posed questions to him and to his CEO in May 2019, little were we to know that they were already in the latter stages of arranging a sale of the business for £320 million. In an article in The Times in March 2020, it was noted that the annual dividend from his holding company, Noble Grossart, was over 10 times more than the previous year, clearly relating to his stake in that transaction. in the article, Sir Angus commented:
..that the profit reflected “the efforts and knowledge of a lifetime”, rather than the work or events of a single year. He went on: “It confirms, yet again, the merits of our long-term strategy and of consistently sticking to what we do best.” Sir Angus pointed out that technological advances and the greater availability of information had not protected investors from uncertainties and volatility. He believes that the changing landscape should underpin the importance of human judgement, and said: “More information does not always lead to better decisions and conclusions can become risk-averse and diluted when excessive process concentrates on what might go wrong.“Decisions do not occur like a puff of smoke at a collective seance table: they have to be taken and invariably with clear human responsibility and judgement.”
“Noble art of investing pays off with bus builder’s sale” – The Times
A fifteen year investment for which an 82 year old investor received a massive return that, he made clear, represented the “efforts and knowledge of a lifetime”.
Bravo, Sir Angus, bravo.
Now, in closing, and the reason I was reminded of Sir Angus, is that yesterday Charlotte Street partners republished thoughts Sir Angus wrote in 1982 that they felt was absolutely still apposite for us today. To me I pick out of it so much wisdom I will likely write a post with my key learnings, but for now, I encourage you to read: “A climate of leadership“