How do you use behavioral finance to improve your investment results? One way is to restrict your portfolio managers’ freedom to make decisions. That is the process employed by Simon Hallett, Co-Chief Investment Officer at Harding Loevner, which manages $72 billion dollars. The rules he creates has forced his portfolio managers to stick to a process that is devoid of emotional errors. The firm’s global equity portfolio has outperformed the MSCI ACWI by 250 bps annually since its 1989 inception.
Hallett also explains why he became the owner of the Plymouth Argyle Football Club, the League One team he grew up rooting for in his hometown of Plymouth, Devon, England. The team still plays at Home Park, the same location it has been in since 1901. Buying the team was both a labor of love and “the worst investment anyone could ever make.” He made the purchase as a way to “give back” to his hometown – renovating the local stadium, and improving the surrounding area.
Under Hallet, the Plymouth Argyles have explored a form of “Moneyball” for Soccer. Despite competitive markets, there are inefficiencies on the edges of professional sports. A savvy team can exploit these to avoid overpaying for a hot player and to identify those players whose costs are far less than their contributions to their team – the under-valued players.
A long list of his favorite books are here; A transcript of our conversation is available here.
You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Overcast, Google, Bloomberg, and Stitcher. All of our earlier podcasts on your favorite pod hosts can be found here.
Be sure to check out our Masters in Business next week with Paul Wraith, Chief Designer for Ford, and over the past several years, the Chief Designer for the new 2021 Ford Bronco.