Orbis Investments: A Unique Fee Structure and Differentiated Thinking
This week, we had the opportunity to speak with Graeme Forster, a director at Orbis Investments Ltd. With $34 billion in assets under management, Orbis is known for its unique fee arrangement and differentiated investment strategy.
Orbis has a distinct corporate structure, being owned by a not-for-profit foundation. This structure, similar to companies like Rolex and The Guardian, was established when the original founder gifted its value towards philanthropy.
One of the standout features of Orbis is its fee arrangement. For institutional accounts of $100 million or more, the firm charges a base fee of 33% of outperformance compared to the benchmark, with no management fee. In addition, if they underperform, they refund up to 25% of their performance fees. This fee structure aligns the interests of Orbis partners, who are the single largest investor group in their own funds, with those of their clients.
Since its inception, Orbis Investments has consistently outperformed its benchmarks, boasting an average outperformance of 3% per year. Their investment strategy, known as “differentiated thinking,” focuses primarily on equities. They seek out overlooked companies that have lost favor with the crowd and then apply intensive intrinsic value analysis to identify the underlying value.
Graeme Forster also shared some of his favorite books, including “The Theory of Poker: A Professional Poker Player Teaches You How To Think Like One” by David Sklansky, “Against the Gods: The Remarkable Story of Risk” by Peter Bernstein, and “The Power of Gold: The History of an Obsession” by Peter Bernstein.
To learn more about Orbis Investments and their unique approach, you can find the full conversation with Graeme Forster on Apple Podcasts, Spotify, YouTube, and Bloomberg.
