In Good Company with Nicolai Tangen - HIGHLIGHTS: Anthony Bolton

Episode Date: July 4, 2025

We've curated a special 10-minute version of the podcast for those in a hurry.   Here you can listen to the full episode: https://podcasts.apple.com/no/podcast/the-mindset-of-a-contrarian-investor-anthony-bolton/id1614211565?i=1000715373598&l=nbHow can investors profit by going against the crowd? Nicolai Tangen sits down with legendary contrarian investor Anthony Bolton to discuss the art of thinking differently in financial markets. Drawing from his remarkable tenure at Fidelity, Bolton explains why popularity is risk and how the best investment opportunities often feel uncomfortable. The conversation explores why current market dynamics may be creating even bigger opportunities for contrarian investors, while Bolton shares his views on China, US tech stocks, and the future of markets.In Good Company is hosted by Nicolai Tangen, CEO of Norges Bank Investment Management. New full episodes every Wednesday, and don't miss our Highlight episodes every Friday.The production team for this episode includes Isabelle Karlsson and PLAN-B's Niklas Figenschau Johansen, Sebastian Langvik-Hansen and Pål Huuse. Watch the episode on YouTube: Norges Bank Investment Management - YouTubeWant to learn more about the fund? The fund | Norges Bank Investment Management (nbim.no)Follow Nicolai Tangen on LinkedIn: Nicolai Tangen | LinkedInFollow NBIM on LinkedIn: Norges Bank Investment Management: Administrator for bedriftsside | LinkedInFollow NBIM on Instagram: Explore Norges Bank Investment Management on Instagram Hosted on Acast. See acast.com/privacy for more information.

Hi, everybody. Tune into this short version of the podcast, which we do every Friday. For the long version, tune in on Wednesdays. Hi, everybody. Today, we are in really good company because I'm here with Antony Bolton. And Antony Bolton, he is in a way, in my mind, the father of contrarian investing. You know, the best person I know to do the opposite of everybody else. And my, have you made a lot of money for Fidelity over the years doing that else. And my, have you made a lot of money for Fidelity over the years doing that. So warm welcome, Anthony.

Thank you, Nicola. It's lovely to be here with you. Why can one make so much money by doing the opposite of other people? I think because very few people are doing it. So it's almost by definition. And the trouble in the stock market, if you do what everyone else is doing,

it will work for a while, but the more people who get on the bandwagon, eventually it bursts. I think that's why it's important. My view of investing that popularity is risk, and conversely, unpopularity is opportunity. I'm not saying everything that's unpopular, therefore, is an opportunity. But I just, early on, I wanted to look where other people weren't looking. And I always felt uncomfortable if I owned something that everyone else owned. Not many people do that way. That's the point. That's why I think it works. So when you think about being contrarian,

I mean, what is it? What does it entail? I think it entails, I think it's something in the personality that you feel comfortable about being different. I think most people are, they like the comfort of the crowd. They like to be reinforced. They like the people around them to be telling them, you know, what you're doing is good,

it's what I'm doing and what everyone's doing. So I think there's something in the makeup of a contrarian that is really important. And it's very difficult to put my fingers on it because often my colleagues at Fidelity say, how can I become a contrarian? And I think you need to start, I'm not sure, I don't think everyone can do it, put it that way.

So there has to be something inside you. And what is that? What is that something? And it's so difficult to put one's finger on it, but it's the ability to back your own convictions, to be unemotional and to be patient, I think, is part of it, because often you're gonna have to wait a bit.

When you look at the stock market, what are the type of things you look at? How do you gauge the stock market's mood, for instance? What are the indicators? I was someone who liked to look at a whole amalgam of things. And I always say, look, what I looked at wasn't necessarily different from what most people perhaps how I mixed it together. It's interesting when I look at a stock, often the first thing I look at is the chart. I want to know, you know, the first thing I look at is the chart.

I want to know, you know, the chart immediately tells me. So the chart being the stock price, right? Stock price. And so I'm putting a chart in front of you. What are the things you look at there? So the first, you know, it tells, am I early or late? Is this a stock that's done well for a long time? You know, which probably means I'm late, doesn't always mean I'm late, but probably.

Is it a stock that hasn't done well. And those were the ones I particularly like, you know, to screen for because I'd look at them, some of them were no good, you know, they're always going to be dogs, duds. But particularly if there was change, if there was change in the management or the portfolio of businesses that they were in, or the environment was changing for the better. Then I'd look, especially with UK companies, I would look at the shareholder list. I found it's a very underrated thing

to look at shareholder lists. And what I was looking for is, are the funds that I rate already owners of this company? This is particularly so in medium and smaller companies. And that was very much the heart of my approach. I mean, as the funds got bigger, I bought more big companies, but I think my greatest love was in medium small companies.

Cause you could, if you did your work, you knew that you knew more on those companies than most people did. And what were the type of shareholders you would have? I mean, I can't, you know, I'm 10 years out of date from doing it or even longer. But there were certain funds that I rated and it was interesting. If I saw lots of them there, then I knew I was late. They had all discovered it before me. If I saw none of them there, I mean that might be a great sign or it might be just it's a terrible

business and no one's ever going to buy this. Perhaps the best were maybe there was already one other fund that I rated and that sort of said, well, they've already picked this up and then, but it leaves lots of room for other people to come in later. How do you decide the entry into a contrarian position? As I say, the whole amalgam of things that I looked at and when I thought it was interesting, I would buy a position, but I'd normally start, it was normally at half a percent, so 50 bits type position in the company.

And then as my conviction increased, I might go up to 100 and then up to 200 and then I have a few positions where I perhaps got up to 400. It was interesting, in the early days I thought of everything. So 400, that's like 4% of your portfolio. Yeah, of the portfolio. In the early days I thought of everything absolutely because obviously in the last 10, oh no, last 20 years or so, one thinks much more in terms of relative positions than absolute

positions. But that's how I did it. And I normally had a thesis on it. One of the things I particularly liked were asymmetric returns. What does that mean? So stocks where I thought the downside was limited, but they might in certain circumstances have a lot of upside. So the upside and downside wasn't the same. In a lot of stocks, well, they might have a lot of upside, but they also can have a lot of downside. So the downside was protected by maybe a very strong balance sheet or a business with very good cash flows or whatever it is. But they had something like a drug discovery or they were drilling for oil or something

that if they were lucky, this could make a huge difference to the valuation. How long can you be wrong before you change your mind? How stubborn are you? Well that's an interesting thing. I think it's to do stubbornness versus conviction. You mustn't let conviction. I was always, one of my colleagues said they were on the edge of their seat with stocks. I think that you have conviction, but you've got to be open to changing that. I think that's terribly important, so stubbornness. But it's a difficult business

because in my view, you can get by with luck for three years. I think over three years, it's skill, it's not luck, but anyone's record less than three years might purely be luck. Or the opposite, might be lack of luck, if you're sorry. Yeah. Now, how do you know when you're wrong? I think it's the keeping the open mind. I think keeping the open mind, look,

getting it right 55% of the time is great. So 45% of the time you're gonna be wrong. So you've got to realize that this is a business where we're gonna have a lot of times we're wrong. And you just gotta learn from it and move on. And one of the things I always say is, the things that often differentiate the good managers from the bad managers is not the successes,

it's not having the losers. I think if you can cut out your losers, that can take you from an average or better than average in up to the top quarter. Just moving on to the market and how it's changed. So with all the passive money, the trend following and so on, just how have things changed in the market? I think it makes the trends go on longer. That's definitely the case. And the quality of the competition goes up the whole time. So it was easier to do it 20,

30 years ago when not everyone was visiting the companies, the amount of information wasn't there, the ability to process information has changed. But funny enough, you still get big anomalies. This is the fascinating thing. And almost the dumb money produces the anomalies at some times. And the trend goes on for longer.

So it's a longer wait and people get, can't do the waiting as it were. But it does change. So what is not, some people think, the markets have become more efficient over time, people are much better, therefore the anomalies have disappeared. Well, no, in some ways, some of this creates new anomalies. So the correction comes later, but when it comes it's bigger.

Yeah.