Baron Nils Taube: the world’s greatest investors

Taube was born in Estonia in 1928. During World War II his family fled to Germany to escape the Soviets and then he moved to London to study science. He took a clerical job at stockbrokers Kitkat & Aitken, rising to the position of analyst by 1951. In 1996 he would found his own firm, Taube Hodson Stonex Partners, though he would continue to play a role in co-managing other funds until his retirement in 2008.

What was his strategy?

Taube was a value investor who believed in searching through markets in a large number of countries to find undiscovered gems. He was so enthusiastic about international stocks that the proportion of UK shares in his main fund fell from a half to a fifth between 1975 and 1995. He also liked companies where the management had a large stake in their own business as this gives them an incentive to act responsibly.

Did his strategy work?

Throughout his career, Taube maintained a remarkably strong and consistent investment performance. Taube’s main fund was the St James’s Place Greater European Progressive, which returned 15.74% a year between 1969 and 2006. He also successfully ran the St James’s Place International Unit Trust, which grew 15.23% a year between 1971 and 2006. At the same time Taube Hodson Stonex Partners would grow quickly, reaching $9bn in assets under management.

What was his best investment?

Taube’s international focus meant that he was one of the first UK fund managers to buy shares in giants such as Swedish telecom Ericsson and Swiss giant Nestlé. He also made an estimated £75m (around £190m in today’s money) from shorting the market just before the 1987 crash and buying value stocks during the technology bubble. His best investment came in the 1960s, when he advised a client to invest in Rembrandt Tobacco. Thanks to a takeover this investment went up 700-fold in three decades (an annual return of 20%).

What lessons can Taube teach us?

Taube shows us that it is possible to find good, cheap companies in unexpected places, though some of the more obvious opportunities may by now have disappeared. His success also proves that it can pay to go against the crowd. His emphasis on the quality of management is a useful reminder that they can play a crucial role in determining the success or failure of a company.