After six decades in the industry Nils Taube continues to be as passionate abouthis career as the day he arrived in the UK. Tiffany Hancock talks to Britain'slongest-serving fund manager about his success, and his plans for the future
Having achieved legendary status in the asset management world, 79-year-old Nils Taube has justifiably earned his retirement. But the longest-serving fund manager in Britain is aghast at the thought of a pipe and slippers: "I intend to carry on as long as the good Lord will let me. If you feel you're too old and you can't do the job then you stop. I've been more activist as an investor in the last six months than I have been for many years."
Taube's message is clear: he is more than up to the task and shows no sign of quitting. Every morning begins with a 7.15am taxi picking him up from the genteel neighbourhood of Hampstead and depositing him at his offices in St James's, where his desk overlooks the rooftops of Piccadilly and the Ritz is a convenient stone's throw away.
It's all a world away from Taube's humble arrival in the UK as an Estonian refugee in 1946. He began as an office junior at the family stockbroker Kitcat & Aitken, where, he recalls: "One of the first things I did was discover that if you looked at government securities which had two or three years to run, there was a period in which they went up rather more than the rate of interest. I tried selling this to my bosses but they looked at me with complete puzzlement and I was sent back to licking stamps."
Undeterred, Taube's ideas were eventually noticed and he rose to become partner by 1957. He founded the Society of Investment Analysts in 1955 and built a business with more than £8.5bn in assets with his partners at Taube Hodson Stonex.
The two funds that he ran continuously from 1969 until 2006 have returned more than 15% a year, and units in his original European fund, the St James's Place Greater European Progressive fund, have grown in value 200-fold since 1969. Taube is, by his own admission, "really quite good" at what he does.
A new venture
Taube eventually bowed out from the firm in April this year and immediately founded Nils Taube Investments with Chandos Gore-Langton as a joint managing director. They launched the S&W Taube Global fund on 4 April with assets of more than £20m, a figure that has now risen to £41m. As Taube explains, "I left on the Friday and started on the Monday three doors down the road here. If you go round the banks of London, you won't find many 78-year-olds being employed, but what it doesn't mean is that you can't invest money, as Mr Warren Buffett will explain to you."
Six decades of market experience is not to be sniffed at and Taube's finger remains as firmly as ever on the pulse. His investment philosophy is simple, and something he sums up as "international plagiarism". Taube says: "Some of the best ideas in one country can translate into another country. There was a man called Tom Lehrer who used to sing a song: 'plagiarise, plagiarise, let no-one else's work evade your eyes'. That is the key really."
He errs on the pessimistic side when talking about the fate of the world economy over the next few years and is consequently heavily weighted in gold, a tactic that has rewarded him well over the last few months. Roughly 8% of the fund is in gold bullion while 12% is in gold shares in Australia and South Africa.
"The sub-prime crisis is worldwide. It's like a disease which the world has caught. They've borrowed too much money to buy houses. Even in Estonia they are talking about house prices collapsing and interest rates going up. There's a shortage of money and interest rates are going up so business might slow down more than people are expecting. What could happen is that people might get scared and lose faith in currencies and start investing in gold," says Taube. He adds that Fed chairman Ben Bernanke's decisions on interest rates haven't helped the status quo: "That extra liquidity is not sustainable. Our reaction was to add another half again to our gold share after the September rate cut."
Taube predicts a fall in the housing market and says that the origin of the buy-to-let boom was the nightmare in the stockmarket from 2000 to 2003: "The average punter didn't go into the stockmarket at the bottom. He went into the buy-to-let market instead. Excessive leverage is almost certainly in reverse now though, and the banks will be forced to grow more slowly. The definitive crisis has not happened yet. At the bottom of the market people sell good shares which they have absolutely no reason to sell." He smiles and adds: "When things look awful you must always buy a little bit."
Taube is also heavily overweight the energy sector: "We have about 27% of our portfolio in oil and gas." Taube explains: "It is our main spin on emerging markets. It's fairly obvious that the emerging middle class in India and China are going to want to drive their cars a little more each year. Energy demand in India is increasing at 7% per annum, which is a huge amount, and the Chinese car population is going up far faster than the American."
Swimming against the tide
Within the sector, Taube is bucking the trend by focusing on oil companies rather than oil services. He says that oil services aren't necessarily overpriced but that oil companies are underpriced. To that extent, he has 7.2% of his portfolio in BP and another 6.2% in Royal Dutch Shell B. He says: "We're not afraid of having a large portion of the fund in a share that is good and unpopular. We've seen the shares falling at BP but they have a lot of assets that are valued at the wrong price."
Taube has no fear of swimming against the tide, although he qualifies this by saying: "If the majority of people think it's a good idea, then it's a fad. If something is happening but it is triggered by a genuine change in circumstances then it's a trend."
One other trend he is buying into is the increasing importance of Australia to India and China. The fund is 18% weighted to Australia, of which 6% is in agriculture and the rest is in metals including gold shares. As part of the Australian metals exposure, 4.8% of the fund is in BHP. "We believe Australia is the country that will supply the Chinese, the Indians and the Malaysians with food as well as raw materials," he says. Taube admits that the recent drought in Australia is "concerning" but argues that the country also has an enormous amount of rain that runs straight out to sea: "They just need to harness that a bit better and they'll have less of a problem than they think."
Taube's portfolio is both bold and unusual. It is 70% invested in large-cap stocks. The fund inherited 80 stocks but has been quickly siphoned down to 35, something made far easier by virtue of the small in-house team: "The fact that there are only two of us means that we can make decisions very rapidly, although obviously compiling and sifting through the data can take weeks or even months. Also the fact that we're such a small fund means that we can reverse tack in half an hour without incurring huge penalties."
That said, Gore-Langton explains that as the funds under management expand, so too will the team. However, he also says: "We talk a lot to our brokers, many of which are contacts from Nils' former career, and if we want to talk to a particular analyst then that is very easy to arrange."
The fund is targeted at private individuals who want to invest for the longer term and Taube says: "We'd like to invest in this fund as we would with our own money." A great deal of interest is coming from investors who are drawn to the gold component of the fund. An offshore mirror is due to be launched by the start of next year and Gore-Langton and Taube are currently seeking cornerstone investors, although they will also invest their own money at the same time.
However, as both managers admit, the key question on everyone's lips is what will happen to the fund if something happens to Nils. Gore-Langton replies: "Obviously Nils is not going to go on forever and we will deal with this as and when it arises. The message at the moment, though, is that Nils is raring to go and doing a great job. The train is leaving the station and investors need to get on." n
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