The Pengana Australian Equities Fund, uses the FBI’s interview techniques to get under the skin of CEOs, seeking to catch them in lies, exaggerations and deflections of blame for their actions. By gauging if they’re trustworthy and competent, the fund decides whether to hold their companies’ shares!
“We are like the FBI,” Kessler said in an interview at his office in Sydney. “We have a dossier on each management team.” The approach has helped deliver steady returns for the investment fund since its inception in 2008, with average net performance of more than 10% a year. In the era of computer-driven strategies, it’s one aspect of investing where human judgment is still paramount.