Jean-Marie Eveillard was born in Poitiers in 1940 and studied at the prestigious Hautes Etudes Commerciales de Paris, before getting a job at the investment bank Société Générale in 1962. He moved to its New York office six years later. By 1978 he was the lead portfolio manager of its International Fund (now First Eagle), which he managed until 2004. He also managed the Overseas Fund from 1993 to 2004, as well as a gold fund. Now retired, he continues to advise First Eagle and has taught investing at Columbia University.
What was his strategy?
Eveillard’s superiors at Société Générale initially urged him to go for growth stocks. But after reading Benjamin Graham’s The Intelligent Investor in 1968, he decided that value investing made more sense, since it relied less on attempts to predict the future. His scepticism about forecasting led him to focus more on firms’ balance sheets and assets than on their future growth prospects. He talked to companies’ managers, but felt that the most important thing to assess was their personality and whether they were likely to deal well with future challenges.
Did this work?
Between 1979 and 2004, $1,000 invested in Eveillard’s main fund would have grown into nearly $45,000, compared with only $16,000 for the MSCI World index as a whole. This is an annual return of 15.7%, compared with 11.3% for the market as a whole. His overseas and gold funds also outperformed.
What were his biggest successes?
Eveillard thinks his two most successful decisions were to sell all his Japanese shares during the late 1980s, just before the market crashed, and to avoid technology, media and telecommunications shares over the period 1999-2001. Both decisions were extremely unpopular with his superiors: his avoidance of tech shares contributed to a period of poor performance that nearly got him fired.
Indeed, Société Générale was so frustrated at his “half senile” contrarian approach that it sold his funds to Arnhold and S. Bleichroeder, a New York-based investment bank, only to see their value and assets under management soar after the tech bubble burst.
What lessons are there for investors?
Eveillard’s experiences with both Japan and technology shares show that true contrarian investing can be difficult for many professional investors, who are obliged to meet short-term performance targets. This is one area where individuals, who don’t have to meet any targets, have a lot more freedom.