MiB: Adam Karr, Orbis Investments



 

 

This week, we speak with Adam Karr, portfolio manager at Orbis Investments and head of the firm’s US division. Orbis manages $37B in assets, and has a unique fee approach, where they only are paid a fee when they outperform; not only that, they refund fees to clients when they underperform. The (long only) Orbis Global Equity is their flagship fund, accounting for 67% of their assets, and has compounded at 11% annually, outperforming its benchmark since its 1990 inception. The firm was founded in 1989 by Allan Gray, a former Fidelity Fund manager.

The firm and its employees are the largest investor in the fund.

Karr discusses why they are an “unconstrained and concentrated fund,” with about 60 positions in their core fund. They run over a 90% active share across their holdings. They describe themselves as “Contrarian, intrinsic value” managers. He explains the way the firm chooses new investment ideas: In a firm-wide meeting, analysts pitch their best ideas in what often becomes a freewheeling and contentious battle over the benefits and risks of every position. Even after a thorough beating in the debates, PMs can still buy those stocks, with the purpose of these raucous arguments to fully understand the company, and not merely to win a debates.

The firm’s fulcrum fee — introduced in 2004, and discussed here by me in 2018 — is unique in the industry. Institutions pay nothing unless the firm

Keep reading this article on Barry Ritholtz - The Big Picture.

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