Welcome everyone.

We are privileged to be joined by two truly great investors today.

I'll start the conversation with Sir Chris Horn and who will later then be joined by Christian Syninding, CEO of EQT.

Chris, it's a privilege and honor to have you. Welcome.

I have to say I completely agree with Nikolai, probably the best investor Europe has ever seen.

To back it up with numbers, 9% returns above the market every single year over a period of 21 years. Wow.

On on average. Not not not every single year, but on average. On average.

So share your secret with us.

Well, um, uh, strategy has been to invest in great companies. Um, um, but over time I've come to refine and understand better what what that means.

And a lot of um, but that's just point one, find the great companies.

Point two is being concentrated.

As um um George Soros uh said once, it doesn't matter if you're right or wrong. All that matters is how big you are. Your position size when you're right and and and your position size when you're wrong.

Yeah. If I'm right on a 1% position, it kind of doesn't make any difference.

And that's a double-edged sword. If you're right, it's it's it's fantastic. If you're wrong, it's uh very painful.

So concentration is an important uh facet um because there aren't hundreds of of of uh of great ideas and um and companies.

And you might say that sounds risky then it is.

And uh and then I would uh look at um and ask you well what how do you define risk?

And the best definition of that was for me given by Warren Buffett who we all love and he defined risk as not knowing what you're doing.

Now the uh um a lot of investors and then the third component I would say is long-termism. Mhm.

Yeah. You can be you can find a great company, but if your time horizon is, you know, very short, you're you had the vagaries of of what Kane's called the voting machine.

He said in the short term, the market is a a voting machine, and only in the long term is it a weighing machine.

And um going back to Warren Buffett, he was asked, "Was Coca-Cola a risky investment when you first made it?"

And he said depend on on the time horizon over one year one month very risky.

He couldn't sell where the price would trade at in in it um it doesn't necessarily reflect fundamentals uh in any short or even medium term.

And so I do think time horizon is um a critical thing and even intelligent investors are are unable or unwilling to to to to to uh have a a long-term horizon.

And so and I would put engagement as another component of that for us of adding value.

So those uh and so we we we um so find the great companies focused or concentrated portfolio long-termism and engagement act as an owner in simple terms.

Um but you know a lot of investors get confused that the thing that you want is growth. Yeah. Yeah.

You know and if you look at industries like airlines they've been growing for 100 years maybe 5% a year you know fantastic growth but collectively and cumulatively the industry never made any money because competition was too strong.

And so growth per se growth by itself is is is not a um a a guarantee of of of making money.

Um so you need um critically barriers to entry to competition and sustainable value ad and high value ad.

So that um so it's actually a combination of barriers to entry and and and um high value added um that you you can uh charge for and uh and of course then growth has a value.

Um but the but so everybody would agree with those statements but the the interesting thing is uh um going back again third time to Warren Buffett he said most moes aren't worth a dam because you think you've got a moat but and then it erodess.

And so the real thing is sustainability of moes you know.

So how do you find out whether a great company remains a great company over time.

Yeah.

Well, one of the things is to understand the um so you know the forces of competition and and substitution and disruption are very powerful.

And and we've learned just as in the same way people underestimate complexity structurally, most investors underestimate the forces of competition and disruption.

Why? because they're short-term. Mhm. Keeps going back to the same root causes and um we're um um so we learn through examples and uh uh through sometimes experience and suffering.

We learn through examples and uh uh through sometimes experience and suffering.

Um, one of my investments 30 years ago when before I started TCI was with a European media company that um, Bane Capital had bought control of and uh, uh, it was a monopoly and uh, they boughted control.

It was like a billion euro valuation and uh um and the stock went to a 50 billion valuation 1 billion to 50 billion and then it went to zero.

And it was a a yellow pages company in Italy because the internet hadn't been found it was people thought it was a resilient monopoly but you know something Google destroyed the company so.

We we sometimes don't know Yeah, we can't know what hasn't been invented.

So then how can you know anything? You might say, "Yeah, it was uh Chenia said, "Yeah, unknown unknown."

So you know the you don't know what you don't know.

But uh the um so but certain industries are more prone to disruption than others.

Your risk is much higher and uh and so we try to avoid those those sectors because you're asking for trouble or limit our exposure.

And um one of those sectors uh is technology.

Yeah. So what are the ones you like?

I've always liked as one example infrastructure. Mhm.

Where they're in which is bit unusual you know um it's not that sexy it's a bit boring owning toll roads and airports and transmission lines um cell phone towers and uh but I um I I was born into a poor family and uh so I always wanted to get my capital back.

I thought that was a good starting point. Don't lose your capital.

And so I I sort of believed in physical asset backing. Yeah.

Which most investors don't look at tangible book value.

That's something you know forgotten in economic textbooks as a as a as a as a metric but or a placement value.

But um you know an example is uh maybe 10 years ago, nine years ago um um the Spanish government approached us and and about taking an anchor position in an IPO of their airport Aena.

And uh um airport was basically brand new, huge under capacity um and 75 5% of the the the value was in unregulated shops and car parks and uh you know complete monopoly unregulated and uh huge growth potential and they sold it at a 15% free cash flow yield and uh and what we could see is that you could never replace these assets Madrid airport and Barcelona airport and irreplaceable and um and they sold at the right price.

And uh and what we could see is that you could never replace these assets Madrid airport and Barcelona airport and irreplaceable and um and they sold at the right price.

Valuation matters. They sold it a 15% free cash flow yield.

Um and um so I learned I learned at school that a great company is not necessarily a great investment, but you look at something like cash flow yield to tell you now it's a good time to buy.

And sometimes people say it's things are cheap for a reason. Mhm.

Now people were concerned about government ownership in this case regulation and um and the government did uh impact it.

They limited the compensation of the CEO to €200,000 euros and ultimately the CEO left because he was a very good CEO the original and so um but I it didn't matter because the monopoly was there the assets were there so I like asset backing um of infrastructure.

Another sector that we've can I just ask you one question on this if you like an asset hm the physical asset. Does management quality matter? Is it important?

Less so. Mhm.

It matters for reinvestment risk.

And but one of the things um I mentioned that we do is we're act as owners.

We have people have different terms for that constructivist and activist but I really think fundamentally it's acting as an owner.

And in the case of then and we were worried we didn't have any control and um but we had influence.

I I I I was asked to be on the board I was on the board for three years of the of the airport company and we went to the government and to the board and and and said, "Look, you're throwing out all this cash flow, billions of euros of cash.

You don't need it. We want to propose an 80% dividend payout ratio."

And for you, that's dividends you can spend. And and and they agreed to it. Mhm.

And so my reinvestment risk of management was limited then, very limited.

And uh and so there are things you can do if uh to mitigate risk. Mh. Um and but it does matter.

You know, another infrastructure asset uh we've been invested in is is in the toll road sector for OVL.

It's where there's a family that have about a quarter of a stake and they're fantastic capital allocators.

They just reinvest. They sold Heathrow airport recently and uh you know at a low return and they're reinvesting in Monopoly toll roads at high returns and they just really know their business and uh have high alignment of interest.

So um but you know again Buffett said you've got to indeed you should invest in an industry where yes a monkey could run it because one day they will. Mhm.

And so, you know, I I I I want to find an asset where because, you know, there's no guarantee the CEO's comes back.

Yeah. Yep. And so, I think you have to invest in an in a business where it's a great business and uh it doesn't depend on the manager.

Um because there's no, you know, the assets are ultimately more reliable than than the manager.

So um but you know so in in this sort of where are the moes you we talked about infrastructure and physical non-replicable assets.

Another space we like as an example is aerospace things like aircraft engines and um manufacturers like G aerospace and saffron.

And we like that space because the barriers to entry are extremely high um in terms of intellectual property.

The the it's so complicated to make this product that there've been no new entrance for 50 years. Yeah.

So new entrance is a sign of uh the barriers to entry.

It's one of the the uh the criteria you can look at.

Um so um and um the uh and why is that?

Not only is it very complicated um you make the money in the spare parts.

So once you've got this installed base, you know, the the the the new engines are only a small percentage and the airframers only want one or two engines.

It's too complicated otherwise who there isn't the room for for for multiple competitors. Mhm.

Uh and so um and then for various reasons uh that uh it's very difficult for competitors to enter the the replacement parts and so the switching costs.

Yeah. So that's another uh space where very intellectual property is uh can be of a barrier.

Fascinating.