Hosking Partners is a London boutique founded in 2013 by Jeremy Hosking, a portfolio manager at Marathon Asset Management for over 25 years. It runs a single global equity strategy built on the capital-cycle, supply-side approach — contrarian, long-term, and unusually diversified (350+ holdings) under a multi-counsellor model, managing around $5.5bn.
This report argues that rigid ESG investing rules can backfire, favoring a flexible approach. Hosking Partners is cautious overall but sees two opportunities: Japan, where governance reforms may boost shareholder value, leading to their first overweight in 40 years; and Canadian oil sands, where decarbonization efforts align with long-term performance. Key holdings: Japan (overweighted due to reforms) and Canadian oil sands (favored for decarbonization-performance link).
One-sentence summary: The author believes that rigid ESG orthodoxy will pose greater risk-return challenges and emphasizes the advantages of a dynamic contrarian investment approach, with a [cautious] stance.
The article opens by noting that the team has consistently gone against mainstream investment dogma for nearly four decades, and that today’s rigid ESG orthodoxy will produce more complex risk-return outcomes than in the past. The author states: "We believe that today’s rigid prevailing orthodoxies will produce a greater mix of risk and return outcomes and challenges for investors than in the past, and reinforce the benefits of a dynamic contrarian approach." This means: "We believe that today’s rigid mainstream orthodoxies will present investors with a wider range of risk and return outcomes and challenges than in the past, and reinforce the advantages of a dynamic contrarian investment approach." The article emphasizes that shareholder focus, environmental considerations, and sustainability (all mediated by value) have historically been hallmarks of successful long-term investing, but in the ESG era, the capital cycle approach holds greater advantages in sector and stock selection (the author cites a lead article by Roman Cassini).
Analyst Chris Beaven’s on-the-ground research reveals that Japan’s cultural and regulatory shift is creating conditions for unlocking shareholder value. The article notes that this trip to Japan "has helped open a window into a complex but exciting opportunity, as a cultural and regulatory shift around corporate governance sets the conditions to unlock shareholder value" (meaning: "has helped open a window into a complex but exciting opportunity—where a cultural and regulatory shift in corporate governance sets the stage for unlocking shareholder value"). This theme is so compelling that the region has been overweighted for the first time in forty years, and it served as the inspiration for the cover image of this quarter’s report.
Analyst Omar Malik identifies a (perhaps surprising) strong alignment between decarbonization efforts and long-term performance in the Canadian oil sands sector. The article states: "we find a (perhaps surprisingly) strong alignment between decarbonisation efforts and long-run performance" (meaning: "we find a (perhaps surprisingly) strong alignment between decarbonization efforts and long-term performance"). The institution judges that this area warrants in-depth examination.
The article suggests that investors should be wary of ESG-labeled investing and instead turn to a dynamic contrarian capital cycle approach; Japan’s governance reform and Canadian oil sands decarbonization represent two specific opportunity directions. Institutional perspective bias: The author uses his own four-decade history of going against the mainstream to justify his strategy. Readers should note that this is a position-holder’s perspective, and that the overweight in Japan and holdings in oil sands may already constitute a conflict of interest.
| Asset | Direction | Author's One-Sentence View | Key Data |
|---|---|---|---|
| Japan (Regional Overweight) | Add | First overweight in 40 years, as governance reforms unlock shareholder value | Overweight the region |
| Canadian Oil Sands | Hold & Observe | Decarbonization efforts strongly align with long-term performance, warranting deeper review | Strong alignment between decarbonization efforts and long-term performance |