As the Oppenheimer Global Value Fund reaches its 10-year anniversary, portfolio manager Randy Dishmon sat down with George Evans, CIO of equities, for a discussion about aspects of his strategy and philosophy managing the fund.
What is your investment personality?
I’ve never found any single label that fit me particularly well, but there are a few things that characterize me as an investor. I am less risk-averse. I play to win—and I do that in what I believe to be a sensible fashion.
I tend to buy franchise companies, but I do it in a concentrated way (i.e., not spreading out my investments across too many companies), because I think I should provide investors with exposure to my very best ideas. In my view, concentration is a friend of long-term returns.
What are some of the things you’ve learned over the 10-year period of managing the fund?
The most important thing is to maintain independence of thought. To generate superior returns, you need to believe something different than the market, you have to behave differently than the market, and you have to be right. You also need to have courage and strong convictions, which requires focusing on company fundamentals.
What are you most proud of?
I’m proud of our track record. People come to us because they need more money, and returns matter to our shareholders. I feel I have generated excellent returns for our shareholders over a long period of time.
The second thing I’m proud of is the fact that we launched the fund during the 2007—2008 financial crisis, which posed a highly challenging test for many investment managers. It’s a test very few people get to experience in their careers. I survived it while letting my confidence come from understanding what I own, and I believe I’ve emerged as a much stronger investor as a result.
Is there anything you would have done differently?
Many people try to prove themselves at the beginning of their careers. If I could do mine differently, I’d be much more reluctant to own companies in restructuring mode. What I’ve learned is that companies that are fundamentally broken tend to stay broken.
Second, I’d be more willing to pay a fair price for a great company. As a portfolio manager seeking attractive returns for shareholders, I like to buy things cheaply, but many great companies never get optically cheap. You need to buy them at a fair price—and then let them do what they do over long periods of time.
What is the sustainable differentiation that has helped you succeed?
I don’t believe that using benchmarks as a frame of reference has anything to do with generating returns for shareholders—nor are benchmarks any indication of the quality of ideas that you have as a manager, or the quality of thought that goes into the investment process. That has always been my philosophy. I’ve always focused on the returns I generate for my shareholders. I don’t worry about being different; if anything, I worry about not being different enough to win.
Additionally, in my view, there really are very few things that matter to an investment case. I’ve always tried to distill what they are and focus on them:
- Is a company worth owning, ever?
- If so, at what price?
- Are the people running the company working for you?
I believe this approach is sustainable because as soon as you identify a company’s competitive advantage that’s difficult to mimic, you’re investing in something that will benefit your shareholders over the long run. Sustainability is something that’s baked into my investment process as I seek to identify companies’ advantages.
How do you think about risk?
I believe you need to focus on investment risk, which is embodied in what you buy, how much you pay, the people running the company you buy, and your position size. I have a quality bias for what I’m willing to own. I’m stubbornly patient when it comes to what I’m willing to pay. I spend time evaluating the management teams of companies to ensure that they truly are working for me. And I don’t mind if they do well along the way, but shareholders have to do well with them. Finally, position size is an outstanding risk management tool.
Risk for me is an absolute—rather than relative—phenomenon.
What’s the most important thing you’d like investors to know about your fund?
Virtually all my money is right beside theirs—and our interests are aligned. I wouldn’t do anything with shareholders’ money that I wouldn’t do with all of mine.
Follow @OppFunds for more news and commentary.
Mutual funds and exchange traded funds are subject to market risk and volatility. Shares may gain or lose value. Foreign investments may be volatile and involve additional expenses and special risks, including currency fluctuations, foreign taxes, regulatory and geopolitical risks. Emerging and developing market investments may be especially volatile. Eurozone investments may be subject to volatility and liquidity issues. Value investing involves the risk that undervalued securities may not appreciate as anticipated.Mid-sized company stock is typically more volatile than that of larger company stock. It may take a substantial period of time to realize a gain on an investment in a mid-sized company, if any gain is realized at all. Diversification does not guarantee profit or protect against loss.
These views represent the opinions of OppenheimerFunds, Inc. and are not intended as investment advice or to predict or depict the performance of any investment. These views are as of the publication date, and are subject to change based on subsequent developments.