The greatest player who never won a Brownlow

This Saturday, Scott Pendlebury plays his 433rd game of AFL football.

That makes him the most-played player in VFL/AFL history. Two decades at Collingwood. Six All-Australian selections. Two premierships, thirteen years apart. The most disposals, the most handballs and the most tackles in the history of the competition.

And he has never won a Brownlow Medal.

That chart above still floors me every time I look at it. Pendlebury has polled 225 career Brownlow votes, more than any other player who never actually won one. His best year was 24 votes in 2011. He has finished top-five in the count on two separate occasions.

But in any given season, someone else was the best.

The longer I do this job, the more I see the parallel between Pendlebury and the world of fund management. And the more we think it’s the single most useful frame we can offer mum and dad investors trying to pick a manager.

Annual leaderboards are a terrible way to pick a manager

In any given year, the manager who finishes top of the performance tables is, more often than not, the one who made the biggest concentrated bet on whatever theme happened to be working that year. Oil. AI. Lithium. Uranium. Bitcoin.

That’s not skill. That’s a coin landing the right way up at exactly the right moment.

The trouble is that punters chasing last year’s winner often end up owning the same concentrated bet, just at the top of its cycle. The next year the wind changes. The hot theme cools. The “best manager of the year” disappears from the leaderboard, sometimes never to return.

We’ve watched this movie for about twenty years now.

The managers we admire most are not the ones who topped the table in 2020 or in 2023. They’re the ones who, when you line up their year-by-year returns, have quietly compounded in the top quartile season after season. Maybe never No.1 in a calendar year. Rarely the marketing darling. Rarely the headline.

They’re the Pendleburys.

Process dominates the long run

Here’s the uncomfortable truth that most investors don’t want to hear: over a single year, random chance dominates. A great manager can be unlucky, and a poor manager can be lucky, and you genuinely cannot tell the difference from twelve months of returns.

Over the longer term, the random noise washes out and process dominates. Discipline. Consistency. Going to see the company, ringing the competitor, talking to the ex-employee, doing the channel checks. The boring stuff that doesn’t get clicks.

It is not a new idea. Buffett has been saying it since the 1960s. Peter Lynch said it. Phil Fisher said it. Charlie Munger said it more bluntly than anyone. And yet every January, investors still rush to the previous year’s leaderboard like punters at the Cox Plate, looking for the horse with the most recent form line.

The evidence says to do the opposite.

What consistency actually looks like

The chart above shows the Ophir Opportunities Fund against every other Australian equity fund in the Morningstar universe, indexed to a $100,000 investment at the Fund’s inception in August 2012.

After all fees, the Fund has compounded at +22.8% per annum. The next-best Australian equity fund over the same period has done +18.4% per annum. The median has done +9.1% per annum.

Now, look at the shape of the black line. It is not a smooth ride. It has ugly months and ugly quarters in it. It has one particularly ugly year (2022) that we still talk about as the year that defined who we are as a team.

We were not No.1 in every calendar year. We were not even No.1 in most calendar years. But we have been top-quartile in most years, and that is what compounds into the line you see above.

Quality, not just quantity

In a recent letter to investors, we wrote about the difference between the quantity and the quality of returns.

Quantity is the headline number. Did you beat the benchmark? By how much? That’s what every investor looks at first, and fair enough, you can only spend the returns you make.

But quality is what tells you whether those returns are repeatable, or whether the manager just got lucky in one regime.

We borrow a metric from American baseball to measure it: batting average. It is simply the percentage of months a fund outperforms its benchmark. In baseball, a .300 average (30%) is considered excellent. In funds management, a manager generally needs more than 50% to outperform over time. The Ophir Opportunities Fund sits at 71%.

We also measure something called upside and downside participation. When the market is up 1% in a month, how much are we up? When it’s down -1%, how much do we give back?

For our Ophir Opportunities Fund since inception, the answer is +1.36% on the way up and -0.63% on the way down. Outperforming in up months and not falling as much in down months is the engine of long-run compounding.

These are the Pendlebury statistics. Not flashy. Not headline-grabbing. Not “top of the votes in 2011”. Just consistency, applied over a long enough period that it eventually becomes the most valuable thing in the game.

A retired CEO said something to me a few years ago that really stuck with me. He said the things you remember most in your working life are the tough times, and how you came through them together. 2022 was one of those for us. Looking back over our fourteen-year journey at Ophir, it is the year we learned the most from, because we came together, we got better, and we pulled through.

The Pendleburys of fund management have all had a 2022. They just kept showing up.

The player still on the field when everyone else has gone home

Pendlebury is 38 now. The Pies will let him retire when he is ready. He’ll get a guard of honour and a standing ovation and probably a stand named after him, and Collingwood supporters will tell their grandchildren they were there when number 10 ran out for the 433rd time.

He won’t be remembered for any single season. He’ll be remembered because he was always there. Because every coach at Collingwood for two decades wanted him on the field. Because when the game was close in the last quarter, he was the one with the ball.

That is the goal as an investor too.

Not the medal in any single season. But being the player still on the field when everyone else has gone home.

Good luck on Saturday, Pendles. Surely the Pies can’t lose to West Coast in your milestone?