The Hedge Funds Club Good Life Interviews – Part 45: Paul Smith

Paul Smith is an industry legend, perhaps most famous for his work at fund administrator Bank of Bermuda (later acquired by HSBC) and as President and CEO of the CFA Institute. Now he’s back in Hong Kong where he runs his own firm Warlencourt. HFC boss Stefan Nilsson checked in with Paul for a chat about reintroducing megafauna, silence, black coffee, not getting stressed, being comfortable with defeat and much more.

From where and how do you get your daily general news updates?

Depends. If I am travelling, I read The Economist and the FT online. I also watch the evening news on BBC World via a streaming service. If at home in Hong Kong, I read The Economist online and the FT on paper, traditionalist, but The Economist printing is of such low quality the online version is, alas, better. I also listen to Hong Kong radio news on RTHK3 from 6:30 am to 9:00 am as background whilst I exercise. Long walks in the hills of Hong Kong. BBC evening news as well.

What do you do to unwind on a weekend?

Nothing special. Avid sports fan so usually watch some soccer, rugby or cricket. If in the UK, I would do this live otherwise on TV. Always visit the gym and usually have a social date with friends for a meal. I don’t need to unwind as a rule! I have a very lucky disposition and don’t get stressed.

Can you name a great book you have recently read?

“Rewilding” by Paul Jepson and Cain Blythe. My youngest daughter is an ecologist and she got me interested. Fascinating and positive. Easy to read. Tells you all you want to know about how we can reintroduce megafauna into habitats to help them return to their condition of 10,000 years ago! Yes, it’s possible and has incalculable benefits for plant and wildlife diversity and also for global warming.

Your soundtrack of choice?

Silence!!! I read a lot and any music does my head in. I can’t concentrate as the rhythms seem to disrupt my brainwaves. It’s a constant source of friction with my wife who likes music to help her think! An ideal marriage.

What drink do you start the day with and what drink finishes it?

Always black filter coffee! But never after noon as I don’t sleep if I do. Not a nightcap person. Like most English people, I like to drink! So, I try to make sure that water and coffee are all I have for five days a week and at the weekend it’s a heady combination of gin, wine and beer. Taken in any order and in quantity. If in the UK, the beer is always bitter or Guinness. In Hong Kong, it would be Heineken on Carlsberg. Italian red wine by preference. Gin is just gin. It’s the tonic that counts. Schweppes always. Fever-Tree ruins any gin.

What’s the worst money mistake you’ve made?

I worked for a company that was bought out by HSBC and I received substantial HSBC stock in the transaction. I didn’t hedge the position or sell it and hung on to this day. Big error!

Have you ever had a great mentor and what did you learn?

Yes. He was a strange character. Not everyone’s cup of tea. But I started working for him when I was 25 and spent the next 11 years with him. The biggest lesson he taught me was patience in business. That everyone in life floats into your orbit at least twice during your life. If that person does you down, don’t fret, don’t force it, just wait. Life is a long race and at some point, you will be able to have the advantage over them. That advice has kept me calm during periods of adversity. I am not naturally that way inclined and this advice really helped keep me balanced.

What gives you energy?

Easy. Being around people who are young and hungry. I have been so lucky in the last decade of my career to have been able to spend it with twenty- and thirty-year-olds. My mum said something to me when I was in my teens – what gave her hope was the sure knowledge that the next generation was better than hers. I have carried that with me. The next generation is far cleverer, more moral, better balanced than mine and being around them is a huge gift.

How do you stay grounded and focused as a person in these turbulent and fast-changing times?

Read, read, read. History by preference. We have been here before and coped and we will do again. This too shall pass.

Can you name a terrific restaurant that you love?

No. I never remember what I have eaten. I remember the people I ate with. Just as happy with fish and chips as gourmet cooking. It’s who you are with that counts not what you eat. Sorry to all the restauranteurs out there!

What’s your favourite museum in the world?

The White House of the Confederacy in Richmond. I am a friend there. An amazingly apocalyptic conflict that changed the world – but not as much as it should have done. This is a museum that really tries hard to interpret the past through the eyes of the present but with empathy for our forebears.

Are you active on social media and what do you actually use it for?

Yes, very. Instagram, LinkedIn and Twitter. Firstly, to stay connected with people I care about and secondly, to try to promote causes I care about – ESG and equality of opportunity for all.

Do you have any secret guilty pleasure that you are prepared to reveal here?

Nope. All my pleasures are taken in full view!

What kind of battle dress do you normally put on for work?

Always a suit and tie. Can’t have my game face on without them. First impressions do make a difference and how you treat others is key. Putting a suit on shows you care what other people think about you.

Do you celebrate your wins? If so, how?

No. They are too rare and am more comfortable with defeat. I am English, after all.

What makes you happy?

My wife and my kids. Spending time with them is all I care about.