At Platinum, we talk a lot about facts versus feelings [1].
With the All Blacks long-term success now coupled with huge commercial interests, there has, in recent years, been intense coverage of this great sporting team, particularly on their culture, an acute focus since 2005 after collective poor behaviour. The culture creates positive feelings.
The All Blacks are the most dominant team in sporting history. This results from a confluence between initial success while a national identity was being forged as a small, South Pacific outpost, and the subsequent incentive to create an aligned structure despite rugby being amateur until 1995. These are the facts.
When analysing companies we trace their antecedents to work out why a business exists, how it has evolved, and what it is today, before we assess its future, to weigh against its price. In this light, the All Blacks journey has taken 148 years since rugby was introduced to a nascent colony. They have built a system that looks set to continue to produce in the years ahead. However, we cannot weigh this against market prices, unless we could consider long-term betting odds [2].
When considering investing with a fund manager, facts and feelings are also a useful framework. Recent strong performance, or celebrity-like focus on “star” fund managers tend to create warm feelings. It is important not be blindsided by either. To focus on facts requires understanding the philosophy, the people, the process. One must determine if the manager (team, not individual) has an edge on the market, and if so, will it persist.
At Platinum our system is founded on a belief that opportunities are best found in the out-of-favour, and where there is change. We believe a deep, almost obsessive, understanding of businesses is a critical component of analysis. This requires us to hire curious people. Our system has evolved and been refined (we think for the better) as the company has grown since 1994 [3]. The one-location environment has consciously been set up to foster an intense collaborative debate. Our only goal is for the team to generate good outcomes for our clients.
There are parallels with the All Blacks, who have an ethos around how rugby should be played, a requirement to find skilled players, a strong aligned system of rugby in New Zealand, believe that “no one is bigger than the team” [4], and who strive to win for their nation.
Ben Darwin’s work on cohesion [5] focuses on interactions between people within a team. The All Blacks have benefited further than as a team alone. They stand at the apex of a wider system of Super Rugby, provinces, clubs and schools. The Christchurch-based Canterbury Crusaders are our inaugural winner of Australasia’s Best Sporting Team [6], with cohesion at their heart; their feeder province Canterbury has been dominant in recent years; even Christchurch Boys High School note proudly that they provided seven members of the unbeaten 2013 All Blacks.
In the article that follows, the All Blacks’ success, driven by the development of an aligned system of NZ Rugby is considered. Its emblems – the haka, the silver fern and the black jerseys – are synonymous with New Zealand in the eyes of many and originate from the 19th century.
The key message is that more importantly than recent improvements in culture that a system, the development of which was incentivised by national identity, has arguably been by far the bigger driver.
[1] https://www.platinum.com.au/Insights-Tools/Investment-Fundamentals/Investing-What-Matters/Article-Item/Facts,-Feelings-and-the-Importance-of-Composition
[2] The most distant odds I can find on the internet today relate to the 2019 World Cup. Our investment horizon is 3-5 years, and we do not speculate in any case!
[3] https://www.platinum.com.au/Insights-Tools/The-Journal/Cohesion-at-Platinum-(Video)
[4] Source : Legacy by James Kerr
[5] https://www.platinum.com.au/Insights-Tools/The-Journal/Cohesion-with-Ben-Darwin-(Video)
[6] www.platinum.com.au/abst
