I have had a 40 year fascination with the sport of horse racing, and spent time with some of the very rare individuals, who have sustained a successful career as a professional gambler. Their betting strategies have constantly evolved over the years, as their “edge” has waned but if you look at their best success, it is come in sports or disciplines that play to their “character”.

The thought crossed my mind with a couple of hedge fund and private equity managers recently. Hard-nosed financial minds with a powerful track record and reputation for finding and turning around distressed businesses. Perhaps due to their own hubris, brand power or the quantum of dry powder needing a home, they have jumped into growth equity investing. The nuanced art of buying a superior business and attracting other superior entrepreneurs to join the party (“buy and build” strategy) while instilling operational and financial discipline. Yet their character traits are highly controlling and intense, their social skills and ability to create a seductive rapport with entrepreneurs is largely non-existent despite their high intellect. Imagine the Oxford or Yale professor running for public office in a blue collar constituency.

That they have arrived at first base, made the initial “platform” acquisition, is no sign of future success. Merely a group of people, who have bought into an investment “concept” but lack the real world skills and volition to build a meaningful platform.

In theory, I have the passion, size and stature to be a jockey but I wouldn’t bet on myself to have the courage to race upside other thoroughbreds at 30 MPH, why would an investor assume their character would allow them to succeed in every investment discipline?