Friday Wrap-Up: A Hedge Fund Legend and Reflections on the Global AI Race

**Marthe Skaar** (0:00)
Hi, everyone, and welcome to In Good Company.
Oh, this was not a familiar voice. I'm Marthe Skaar, Chief of Communication and External Relations in Norges Bank Investment Management. But I'm not alone.

**Nicolai Tangen** (0:12)
No, I'm here too, Nicolai here.

**Marthe Skaar** (0:14)
This is a new format for our Friday episode. So it's a short wrap up for approximately 50 minutes, where I sit down with Nicolai, and we will cover the highlights of this week's episode. We will talk about what's been happening in the fund and the markets, and then maybe something a bit more personal at the end, Nicolai?

**Nicolai Tangen** (0:32)
Yeah, I think it should be a little fun.

**Marthe Skaar** (0:43)
Okay, so here we go. So this week's episode featured Sir Paul Marshall, who co-funded Marshall Wace in 1997
And it's one of the largest and most successful hedge funds in the world. If you haven't listened yet, we will talk about some of the highlights today. But please go and check out the full conversation. First, Nicolai, I want to start with, who is Paul Marshall to you?

**Nicolai Tangen** (1:07)
Well, Paul is one of the first people who started a hedge fund in London. He started in 1997 That was, I think, probably was number three. There were only OD who started prior to that, and then Edgerton Capital, where I worked. So he was one of the OGs, one of the original gangsters.
Been very successful, grew the firm.
I mean, it's really an extremely impressive setup. You'll hear and understand more when you listen to the podcast.

**Marthe Skaar** (1:41)
You also ran your own hedge fund, Oco Capital, before coming here. So what does Marshall Wace and the firm you ran have in common?

**Nicolai Tangen** (1:52)
Well, Marshall Wace is known for what is called TOPS. It's a system where they get a lot of input from broker contacts and so on. But they also have a deep fundamental side. And that side is very much akin to what we were doing at AKO. Like deep fundamental analysis, meeting companies, doing the research.
So quite similar in style.

**Marthe Skaar** (2:17)
And talking about TOPS, and of course, when you listen to the episode, you will hear more about what that is. But that's an alpha capture system. Like listening to that, what does it tell you about innovation?

**Nicolai Tangen** (2:28)
Well, they have been very, very strong on innovation. It's a really data heavy company. And I think it's quite interesting. There are 700 people, the same amount of people as we are in the fund. They have 200 in tech and operations, the same as we have.
So the same emphasis on AI, learning, feedback systems and so on as we strive for here.

**Marthe Skaar** (2:51)
He's also written a book, Ten and a Half Lessons from Experience. Have you read it?

**Nicolai Tangen** (2:57)
Yes, I have. It's very good. It's a few years back now, but it's kind of the everlasting theories about how you should avoid biases, how we tend to stick to our losers, how we sell the winners too early and all these kind of things. So a lot of common sense in a short and very readable book.
I think it's quite fun actually because I did my master's degree on how to invest and when you use pattern recognition and when you use analysis. Of course, I never disclosed who I interviewed, but I did interview him for my master thesis. So our history goes way back.

**Marthe Skaar** (3:39)
Okay. But that also means that he has influenced your thinking as an investor.

**Nicolai Tangen** (3:42)
Of course, absolutely. I mean, you have to learn from the best and he's one of them.

**Marthe Skaar** (3:48)
So what he also talked about was how firms often grow too hebristic and too big.
Of course, he's focused in on the living return year after year. What are your thoughts on what he said and also thinking about the fund that you're leading today?

**Nicolai Tangen** (4:07)
Yeah, no, hubris and arrogance leads to death of asset management companies. It's one of the most important things.
It is a very humiliating industry to work in because you are wrong so often. If you get 53 percent right, you are doing extremely well, but you have to not to be arrogant and you should be stubborn to a degree, but you need to change your mind. I think if you're too arrogant, you shouldn't manage to change your mind. Arrogance is really the worst thing in this industry. I would say all the really successful fund managers I meet are very humble people.