Question 04
What if we get it wrong?
We can promise that a time will come when we look stupid.
Being wrong is part of the job. If we don’t look foolish at times, we aren’t thinking big enough. That’s not for everyone. We spend a lot of time helping clients understand what they are getting when they invest with Orbis. When we get things wrong, we tell you why, plainly, and what we are doing about it, so you don’t throw in the towel at the wrong time or for the wrong reasons.
Our first line of defence is buying investments at a material discount to what we think they are worth. That margin of safety doesn’t stop us making mistakes, but it can help reduce the cost of being wrong and increase the potential reward when we are right.
When an investment disappoints, we test the case again. If the facts still support it, we hold our nerve and may even add to the position. If the facts have changed, we change course and redeploy capital to stronger ideas. What matters is responding with discipline and humility, then explaining what we are doing and why. Long-term partnerships aren’t built by avoiding uncomfortable moments. They are built by navigating them together.
We don't need every idea to succeed
Strong opinions, lightly held.
Here's something asset managers rarely say: "We promise we are going to look stupid." For us, it's part of our standard pitch. In fact, we get about four of every ten stock picks wrong and a few of those will look really foolish. We tell clients that upfront because one of the worst things we can hear is "I wish you had told me." So we're telling you now. Every investor gets things wrong. What matters is what you get wrong and how you respond when you do.
Our contrarian approach often leads us to opportunities in overlooked or unpopular areas of the market where sentiment has overtaken the fundamentals. While we believe a company has excellent long-term potential, the market rarely recognises that potential overnight and the share price can fall further before it does. Being early can be uncomfortable, but it’s not the same as being wrong. When a holding underperforms, we go back to the evidence and ask a simple question: has the investment case changed or has the market simply become more pessimistic? The answer determines everything that follows. For us, that's what the courage to question means.
If our investment thesis still holds, a lower price doesn't weaken the case. In some cases, it may strengthen it and we may increase our position. If the facts have genuinely changed, if the business has deteriorated, if the competitive position has shifted and our original assumptions were wrong, we have the humility to admit it. We cut our losses and move capital to a better idea. Capital should always be allocated to our strongest ideas and when one no longer qualifies, it no longer deserves its place in the portfolio.
Global Equity Fund: winners vs losers
30 Jun 2026 | Past performance is not a reliable indicator of future results. Winning and losing stocks are calculated on their performance relative to the MSCI World Index, net of WHT and based on historical information. This chart should not be used as a prediction of what future winning and losing %s may be for the Orbis Global Equity Fund (Fund). The Fund’s benchmark changed from MSCI World Index, net of WHT on 1 January 2021 to MSCI All Country World Next Index with Special Tax. Both are similar but the latter incorporates both developed and emerging markets and uses WHT applicable to Australian investors. Totals may not add to 100% due to rounding.
Starting with cheap companies gives us a margin of safety. It doesn't stop us getting things wrong, but it can reduce the cost of being wrong while increasing the potential reward when we're right. Over time, that asymmetry matters far more than getting every investment right. We don't need every decision to succeed. We need the value created by our strongest ideas to outweigh the losses from the ones that don't.
Cheap stocks don't tend to stay cheap
Source: Orbis, LSEG. Quarterly data from 1988 for all FTSE World Index constituents. Price-earnings ratios use consensus 2-year forward earnings estimates. Valuation groups are absolute and fixed across time, so changes in overall market valuations are captured, and observations on any single date are not evenly distributed across the groups. Acquired and delisted companies represent <5% of total observations and are not shown.
We don't abandon our philosophy because a position becomes uncomfortable or because an investment disappoints. We test whether the issue is the investment case, our execution, or the way the portfolio is constructed around it. Then we explain what we are doing and why. In our experience, long-term partnerships aren’t built only when performance is strong, but when conviction is tested.
There's a principle our founder lived by that still governs how we work: strong opinions, lightly held. We build conviction through research and debate, then keep interrogating it. The goal was never to defend every decision. It's to make better ones over time.
Here's something asset managers rarely say: "We promise we are going to look stupid." For us, it's part of our standard pitch. In fact, we get about four of every ten stock picks wrong and a few of those will look really foolish. We tell clients that upfront because one of the worst things we can hear is "I wish you had told me." So we're telling you now. Every investor gets things wrong. What matters is what you get wrong and how you respond when you do.
Our contrarian approach often leads us to opportunities in overlooked or unpopular areas of the market where sentiment has overtaken the fundamentals. While we believe a company has excellent long-term potential, the market rarely recognises that potential overnight and the share price can fall further before it does. Being early can be uncomfortable, but it’s not the same as being wrong. When a holding underperforms, we go back to the evidence and ask a simple question: has the investment case changed or has the market simply become more pessimistic? The answer determines everything that follows. For us, that's what the courage to question means.
Strong opinions, lightly held.
If our investment thesis still holds, a lower price doesn't weaken the case. In some cases, it may strengthen it and we may increase our position. If the facts have genuinely changed, if the business has deteriorated, if the competitive position has shifted and our original assumptions were wrong, we have the humility to admit it. We cut our losses and move capital to a better idea. Capital should always be allocated to our strongest ideas and when one no longer qualifies, it no longer deserves its place in the portfolio.
Global Equity Fund: winners vs losers
30 Jun 2026 | Past performance is not a reliable indicator of future results. Winning and losing stocks are calculated on their performance relative to the MSCI World Index, net of WHT and based on historical information. This chart should not be used as a prediction of what future winning and losing %s may be for the Orbis Global Equity Fund (Fund). The Fund’s benchmark changed from MSCI World Index, net of WHT on 1 January 2021 to MSCI All Country World Next Index with Special Tax. Both are similar but the latter incorporates both developed and emerging markets and uses WHT applicable to Australian investors. Totals may not add to 100% due to rounding.
Starting with cheap companies gives us a margin of safety. It doesn't stop us getting things wrong, but it can reduce the cost of being wrong while increasing the potential reward when we're right. Over time, that asymmetry matters far more than getting every investment right. We don't need every decision to succeed. We need the value created by our strongest ideas to outweigh the losses from the ones that don't.
Cheap stocks don't tend to stay cheap
Source: Orbis, LSEG. Quarterly data from 1988 for all FTSE World Index constituents. Price-earnings ratios use consensus 2-year forward earnings estimates. Valuation groups are absolute and fixed across time, so changes in overall market valuations are captured, and observations on any single date are not evenly distributed across the groups. Acquired and delisted companies represent <5% of total observations and are not shown.
We don't abandon our philosophy because a position becomes uncomfortable or because an investment disappoints. We test whether the issue is the investment case, our execution, or the way the portfolio is constructed around it. Then we explain what we are doing and why. In our experience, long-term partnerships aren’t built only when performance is strong, but when conviction is tested.
There's a principle our founder lived by that still governs how we work: strong opinions, lightly held. We build conviction through research and debate, then keep interrogating it. The goal was never to defend every decision. It's to make better ones over time.
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