Kerr Neilson's secret to long-term success

Like all exceptional investors, Kerr Neilson dipped his toe into the world of finance at a particularly young age. He made his very first investment at just 13, and while he admits that, back then, he "didn't have a clue", he soon would grasp what he dubbs the "engine room" of successful long-term investments.  

For those who don't know him, Neilson is often referred to as Australia's answer to Warren Buffett, having paved a path as a steadfast value investor in the '90s and early 2000s. He's also considered to be the man who brought global investing down under - a similarly impressive accolade. 

Having left Bankers Trust after steering investors through Black Monday, Neilson and his former colleagues established Platinum Asset Management in 1994. The funds management group listed on the ASX in 2007, and now manages $16 billion in investor savings. The firm's flagship fund, the Platinum International Fund, has delivered investors an annual compound return of 11.5% per annum since 1995. 

After more than two decades leading the firm, Neilson retired in 2018 and since then he has been investing for himself. According to Forbes, he has a net worth of $960 million - far more than many boutiques profiled in these pages - although today, he's far less dogmatic when he buys stocks. 

He's still investing in Asia, although he's capped his exposure to China at 10%, and believes we are headed for a far more difficult environment than investors are familiar with. He argues that central banks blew it when they "made money free", but he's still finding opportunities within resources (particularly, gold and copper), biotech and artificial intelligence. 

Most of all, he believes that attitude is everything - and that remaining objective is the key to long-term success. Equities, he argues, are the engine room of wealth, and can continue to be so in any macroeconomic environment - you just need to know where to look. 

In this interview, we discuss these topics and more, including the top positions within his portfolio today. 

Note: This interview was recorded on Thursday 12 October 2023. 

Timecodes: 

• 0:00 - Intro 
• 0:47 - What kickstarted Kerr's investing journey 
• 1:57 - The biggest wins and losses from his decades in markets 
• 3:06 - How Kerr's approach to investing has changed since retirement 
• 3:38 - The outlook for Asian equities (particularly China) 
• 5:14 - The stocks Kerr owns in China: Baidu Inc (HKG: 9888), Tencent Holdings (HKG: 0700), ANTA Sports Products (HKG: 2020)
• 5:54 - Inflation and taxation regime changes 
• 7:13 - We are facing a far more difficult environment than we have before 
• 9:15 - Where are we in the cycle 
• 10:22 - Where Kerr sees value today
• 12:00 - Kerr's stance on AI: "It's potentially dangerous" 
• 14:59 - The biggest contributor to Kerr's wealth 
• 16:50 - Kerr's biggest portfolio holdings today: Samsung Electronics Co (KRX: 005930), Microsoft (NASDAQ: MSFT), Booking Holdings Inc (NASDAQ: BKNG), Compagnie de Saint Gobain SA (EPA: SGO). 
• 18:54 - The perfect number of stocks for a portfolio 
• 19:41 - The one asset class every Australian should own