Manager-led funds and poker players

Traveller, there is no path,
the path is made by walking.

By walking, the path is made,
and when you look back

you see the trail that never
will be walked again.

Traveller, there is no path,
only wakes upon the sea.

Lately, while wasting time on FinTwit and its derivatives, I have found myself noticing the number of future promises appearing in the retail investing landscape. New faces, investment theses, charts of cumulative returns, screenshots of annual reports underlined in two different colours. I have the feeling, perhaps wrongly, perhaps not, we shall see, that this constant trickle will sooner or later turn into a large number of manager-led funds. I think this is nothing more than the logical conclusion of personal branding in investing.

And since I have not come here to solve anything, but rather to plant doubts, I started thinking about what might happen if this actually takes place.

The first thing that comes to mind is poker. More specifically, that habit professional players have of staking each other. If we translate this to the new scenario, the idea makes a fair amount of sense: if I am Person A and my style is X, it could make sense to buy a piece of Person B if his style is Y, uncorrelated to mine. Not because Person B is necessarily a better investor (in fact, maybe he is not), but because he sees things I do not see, moves through territories I would never even think of stepping into, or tolerates risks that would make me feel as uncomfortable as listening to my brother-in-law explain why Bitcoin is a scam.

I am I and my circumstance, and if I do not save it, I do not save myself.

Although Ortega was not exactly thinking about fund managers when he wrote this, it helps me get to where I wanted to go. Staking each other among investors would make sense if each person brought their own way of seeing, a different way of being positioned in front of the market. The problem (and this is, I think, the interesting part) is that most of these young promises¹ are not as different from each other as I would like.

They hold similar portfolios. Not so much in the specific positions, although also, let’s be honest, but in something deeper: the philosophy. Lots of quality businesses, lots of compounders, lots of quality at a reasonable price, lots of economic moats, lots of if it falls, I buy more. It is as if they had all read the same book, underlined the same sentences, and memorised the same Buffett anecdotes from the Berkshire meeting (which, to be fair, are also always the same ones and I love them).

And here my little obsession with observing what surrounds me comes in again (which I consider the true engine of anything interesting one can do). If everyone looks at the market from the same place, with the same glasses and the same references, staking each other loses its meaning. You would be buying a slightly different version of what you already do yourself; it would be like me spending my time reading books by authors I adore and then also paying someone else to read books by those same authors for me and tell me, in their own words, what I have already read.

Not all those who wander are lost.

Returning to the matter at hand: I think that in this hypothetical ecosystem of manager-led funds, the truly valuable investors will be the ones who depart from the manual. Those with their own styles. Those who do not do what most people do. The strange ones, the uncomfortable ones, the ones that are difficult to fit into a Morningstar classification. Those who, instead of applying the same formula as everyone else, have arrived at their way of investing after bumping into things (books, markets, mistakes, disappointments) that have gradually pushed them into a place of their own.

And here, although it is hard for me to admit it (because I really dislike recommending anyone, much less in a field as slippery as this one), I have to make an exception. To everyone familiar with the very popular quality/growth/value investment style, I would recommend taking a look at David Orr (@orrdavid), precisely to understand what I mean when I talk about differentiated and flexible management. He is partly the person who made me realise the value of being different in investing; not only because he shows extraordinary returns with his very particular style, but also because of the structure of his hedge fund itself (which, by the way, has delivered staggering returns).

His vehicle is a fascinating collection of the best investors he seems to be finding (I think there are three for now, including him), and the investor spreads his sheep among such good shepherds. The key here, beyond the fact that the three managers are exceptional (one of them in Spain, by the way: @RodriGo_ethe), is that each manager has an independent, distinct, and uncorrelated investment style. These are not three versions of the same value investor with slightly different haircuts, but three genuinely different ways of looking at the market living under the same umbrella.

My dream, perhaps, is this: that each of these young promises gradually evolves towards their own differentiated style, stumbling, reading, making mistakes, leaving behind whatever they no longer need from the manual they learned, and that one day the retail investor is able to build their own table: staking several managers who play genuinely different hands, with styles that truly complement each other instead of overlapping. Not buying the same stake three times disguised under three different names, but spreading risk across ways of seeing that, precisely because they are different, end up adding something.

About knowing how to identify which lenses you have put over your eyes without realising it, which prejudices you carry, which things you take for granted because you once read them on Twitter (sorry, on X) and they stayed engraved in your mind like revealed truths. As happens with humour (which is also about observation), an investor’s own style cannot be fully learned: you either have it or you do not. It can be polished, of course, but there is something innate about it, something connected to how you face uncertainty, what you find attractive, what bores you, what makes you nervous.

That is why, if this new ecosystem of manager-led funds does eventually appear, I will not be especially interested in those who recite the catechism of quality investing by heart. I will be interested, as almost always, in those who go their own way. Those who dare to be wrong in public and to admit, without turning it into a pose, that sometimes they do not know. Those who have more than five contradictions a year because, as someone once said, fewer than five contradictions is dogmatism. Those who, even if they are stranger and harder to sell in a press release, bring a way of looking at the market that is not just another photocopy of the same manual.

The rest, I fear, will be noise. Another table full of players holding the same cards, betting on the same thing, each one convinced that his hand is unique.