This often-discussed short termism, where a company’s annual results can cause sharp rise or falls in their market valuations, is something the Orbis team hope will create opportunities for them to exercise their own strategy.
The more people who examine short-term company results and macro moves the “harder and harder it is to win at”, Preston says.
Instead, he adds: “If you want to maximise your chance of winning you should pick a game where fewer people are playing. The more that the investment time period for investors has compressed, the greater we think the opportunity is to make long-term decisions.”
In dismissing macro drivers and looking at the long term, there is no overarching strategy harshly fought out in a boardroom at Orbis, or dictated by the high brass at the firm, but this key difference with other companies does make it difficult to categorise.
The fund is free to invest in any publicly listed stock anywhere in the world and measures itself against the MSCI World Index.
As a result, the fund often ends up on a contrarian stance compared to others.
For example, it is significantly overweight in emerging markets at the moment when compared to the average fund using the same benchmark.
Preston says: “If you looked at our portfolio today, emerging markets would be the striking difference between us and the benchmark because we think a lot of managers either view emerging markets as being risky or view it as something the clients would find unacceptable.
“One of the areas we have stayed away from is very stable companies in developed markets and that might sound counter-intuitive, but that’s something that people need to get used to when they speak to us.
“We have nothing against developed markets, and we have nothing against stable companies, but we’re always looking for the value opportunities. For one reason or another, possibly related to quantitative easing, possibly related to continuous fears about where the next economic crisis might come from investors have paid a significant premium for safety.”
