I recently had the opportunity to sit down for 30 minutes with Hamish Douglass, the CIO of Magellan at their new offices in Sydney. We discussed a wide range of topics from his biggest influences to the most impactful trends that are driving his investment strategy today. During my time with Hamish, I really got the sense that he's a man on a mission, who still has genuine passion for his craft. Here are a few highlights from our chat (and you can view the entire video interview at the bottom of this article).
We are witnessing the biggest change for humanity in 200 millenia
“Connecting the internet with the individual… is the biggest change for humanity in over 200,000 years, it is huge. It’s absolutely huge. We are just at the start, and the world will look very different in ten years time”.
So you need to look out of the windshield, not the rear vision mirror
“This year Warren Buffett made an $18bil investment in Apple. Charlie Munger at this years AGM said on 3 or 4 occasions, ‘This is really something really important that has happened’. They have an ability to learn and change and adapt by looking out of the windshield, instead of just doing the same thing as in the past".
The market will be ‘hollowed out’ over ten years
“I have a very strong emerging view that the centre of the market is going to be hollowed out over the next decade. There are going to be whole industries that are either wiped out or whose terminal value is dramatically reduced over time. Most car companies we know have a high probability of being bankrupt in ten years. Many energy companies probably have enormous terminal value risk".
YouTube could take $100bil of the TV marketing industry’s budget
“Already seven of the biggest companies by market cap are digital platform technologies. The largest is Apple and the 2nd is Alphabet and then 4th is Facebook. Are they already too large or are they overvalued? I’d say they haven’t even started yet. Advertising in TV is worth $200bil a year. YouTube, which has about $6bil of revenue now, will probably take half the pot”.
Listen to the visionaries for signposts on the future
“A true hero of mine would have to be Jeff Bezos. He is a complete visionary on how you can connect technology and a change of a business model to fundamentally change how commerce can be done in the world. The more you listen to him, the more you learn about how things could change in the future”.
There's a lot of prime real estate that's going to be freed up
“With driverless cars, there is going to be an enormous amount of real estate freed up by car parking. It is estimated that in Los Angeles, you will be able to fit 5 San Francisco’s into the freed up space by car parks being removed”.
Traditional models are being ripped up
“Through these digital platform companies, traditional TV advertising has been ripped up. That model is fundamentally not going to be economic in the future, so dominating TV advertising is not going to give you the winning brand. Both Facebook and Google are giving entry points for upcoming brands. This idea that you buy you detergent at the shopping centre has been ripped up by Amazon, who’s going to have the internet of things connected to your home with automatic fulfilment".
Google and Apple have better prospects than the S&P
“You could say that Google is trading on 17-18 times earnings, for a business that is growing at 20-25% per annum. The S&P500 is trading on 17-18 times. Google and Apple have much better prospects".
I hope that you enjoy the interview. Click here to access the audio interview, or access the video below:
For further insights from Magellan, please visit their website