Allan Gray: Investment guru and philanthropist 1938-2019
● Allan Gray, who has died of a heart attack in Bermuda at the age of 81, was the founder of Allan Gray Ltd, the largest and for many years most successful privately owned investment manager in SA.
He was also one of SA’s greatest philanthropists.
He started Allan Gray in Cape Town in 1973 as a one-man operation and practised a contrarian approach to investing which was unique in SA at the time.
The core of his philosophy was to look for value in unpopular sectors where the share price was well below the intrinsic value of the business.
He believed you would get good returns when the share price eventually moved back to fair value, and run little risk. So it proved.
His results were extraordinary and kept his firm ahead of the pack for many years.
It was an approach that demanded patience, commitment and a meticulous understanding of a business and its underlying value.
“For more than 40 years, our experience has shown that taking a long-term perspective with a contrarian stance can produce demonstrably superior results — but only if one can withstand uncomfortably long periods of underperformance,” said Gray in a letter to clients in 2015.
Gray was born in East London in 1938. He was inspired by his Aberdeen Universityeducated grandmother, something of an entrepreneur herself, a maths boffin and
SA’s first woman mayor.
He matriculated at Selborne College, where an exceptionally inquiring mind hid the fact that he was dyslexic. He studied accounting at Rhodes University and attended the London School of Economics and Harvard Business School, where he completed his MBA.
From Harvard, he went to Fidelity Asset Management in Boston, then the largest asset management firm in the world.
He was a portfolio manager at the Fidelity
Capital Fund when the stock market crashed in 1962.
His contrarian investment approach passed with flying colours. While the market fell 21.7%, his portfolio was up 10%. This sealed both his reputation as one of the great practitioners of contrarianism, and his lifelong commitment to this way of investing.
Gray paid exhaustive attention to detail, focusing on things others considered insignificant, and often spotting extraordinary nuggets of value in undervalued stocks.
He was a private, low key, almost invisible person. The more famous his firm became, the more of a mystery figure its founder was. Not for nothing was he known as the “ghost of Cape Town”.
In 1989, he left Cape Town for London. “I’d rather be a small fish in a big pond than a big fish in a small pond,” he said. In the same year, he founded Orbis Investment Management, based in Bermuda, where he later relocated.
In 2017, Forbes estimated his net worth at $1.8bn (about R27bn), putting him at No 3 on SA’s rich list.
He gave most of his wealth to charity and funded the education of thousands of disadvantaged students.
Gray is survived by his wife Gill and three children.