Ann: Forager March 2020 Quarterly Report, page-24

I'm a value investor, the same age as Steve, and I've been investing since 1994 (dabbling from 94 to 04, running the family superfund from 04 to present day and working as a fund manager from 07 to 11).

Whether due to skill or luck, I've left every Australian index in the dust over any six year period, so I think that I am somewhat qualified to comment on these points:

1. Absolutely true, Forager have spread themselves too thin with the International Fund, and it is never going to deliver long term outperformance because Steve doesn't have the breadth and depth of market knowledge that is needed to outperform in those markets. I have also dabbled in international investing, and my results were similarly sh1thouse.

2. Not true, there is nothing wrong with going into a situation with a 99% probability of permanent capital loss provided you've got the right portfolio limits (cf Kelly) and the payoff in the 1% chance that the thesis works out is enough to compensate for the high risk of loss. I've suffered massive permanent capital losses on more stocks than Steve and this hasn't broken my returns.

3. It's not about cultural alignment. I've got no doubt that the team at Forager already is culturally aligned. It's about thinking in a certain way, and not giving a poo about what anybody else thinks. Ultimately, I think that Steve has historically hired a bunch of conformists who would make excellent employees if they were asked to do anything else, but investing is different. In fairness, I think that the old II staff in the mid noughties was truly incredible, to get Steve, Tony Scenna and Nathan Bell in one small team together would be a coup even for a successful hedge fund, those three are all truly excellent stockpickers and they had JG and Gareth as well who are also quite competent.

There is simply no way that you can expect any outfit to get that concentration of talent through normal recruitment praxis.

Finally, I think that TGA or FIG both had good investment theses at the times and prices that Steve invested, and as such were good investments that simply had bad outcomes.