20VC: Managing the Largest Sovereign Wealth Fund in the World: $1.55 Trn of Assets & Owning 1.5% of all Listed Companies with Nicolai Tangen, CEO @ Norges Bank Investment Management

0:00I truly think there will be much tougher times ahead. I think it would be difficult to generate returns and everybody needs to know that. What I look at is how much fair and how much greediest they're out there. When you look at the best investors in the world, they are stubborn because you need to be stubborn and you need to be able to sit with your positions. The people who fail are people who try to do too many things too fast. This is 20VC with me Harry Stabbings and Stayshow is different. We are not joined by a VC or a founder. We're joined by the CEO of the largest sovereign wealth fund in the world.

0:29with over 1 .5 trillion in assets, they own around 1 .5 % of every listed company. I'm very thrilled and honoured to welcome Nikolai Tanjen, CEO of Norgers Bank Investment Management. This was an incredible show to do live and in person in London, and let me know what you think on Twitter at Harry's Debbings. But before we begin, I need to tell you about Hive. 2024 is shaping up to be a big year for the markets, with a number of iconic unicorns rumoured to be going public, Whether you're a fun manager or invest solo, Hive is the best way for you to access the coming wave of IPOs before they hit the market.

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3:09Remote opportunity is wherever you are. You have now arrived at your destination. Nick, I'm so excited for this. I've watched so many of your shows before. So thank you so much for joining me today. Thanks for inviting me. No, I want to start with a little bit on you. So it's a bit of a weird one. What were you like as a child? I think I was unfortunately pretty normal and slightly introvert and read a lot. I didn't have any friends. My brother was really worried that I would perhaps never have any proper future given that I didn't socialize so much. Did you feel you didn't have friends? I didn't have many friends.

3:41No, I didn't. I had my books. I just didn't need that many friends. So my friends kind of came later in life. Did you always have this self -assured confidence? Like I was, no, I'm being serious. I didn't have any friends and I felt like a loner and it was hard. Yeah, I thought it was pretty good to be a loner actually. And so I probably had a bit of confidence there. Did you enjoy school? Loved it. You did. We good at school. I was pretty, I was quite good. I was quite good. How would your teachers describe you? studios, concentrated, probably ambitious. When did you find the love of finance?

4:12Oh, that was early because I was pretty keen on making money, right? So you know what I think? I think a lot of lonesome they are keen to make money to show the world, right? I never felt good enough, and so it was like the way of proving that I was worth something. I think in for your already complex, it should be really celebrated. I think it's a huge thing. That is what drives us pretty much all of us. So I wanted to make some money, and I started to collect the empty bottles, you know, in Scandinavia you get refunds for these kind of things. I sold flowers at restaurants. I did all these kind of things to make you better money.

4:42When did you make your first real money? Well that was really late actually. I did not in my first job, which was in the city. And I did when I joined the hedge fund and that was, you know, in like 97. I was between 32 and 35. Did it make you happy? It gives you some freedom to do what you want. So what I did when I had made some money was to take time off and go back to university and I spent a couple years studying art history. And that made me happy. So it's not the money that makes you happy, but it's just a kind of freedom that gives you. But it wasn't an enormous amount, but I had enough to take a couple years break.

5:14I think a lot of people would say, when I have this, I will be happy. When I have that, I'll be happy. Did you have that, Nguyen? I was a total fallacy. The thing is that if you are not happy now, you will never be happy. They have this study where they ask students at Harvard. So do you have a good life? I know I haven't got a particular good life just now, but I will soon. It's just that now I just have a good new job. There are the same people 10 years later. It's just like no, I'm not so happy now, but I will be soon and 30 years later and the thing is that if you're not happy, you will never be happy and so for you Going back to that child who was a little bit of a loner did that change over time and I hit that okay I don't know what I don't know what happened there But I just became a bit more social and slightly more old going I grew up in a part of Norway, which was really religious, but then I kind of changed a bit and I became more social, good more friends and you know just went out a bit more.

6:04What do you think was the biggest needle moving moment in your career? You mentioned the entrance hedge funds there. Yeah, I think it was when I started at Wharton which is a US university, specializing in finance because that really was a different type of ambitions. You know, no way is the kind of place where you're not supposed to be too ambitious, at least not overtly, then you get to America and it's just like, hey, we want to conquer the world and you are allowed to say it when you are like 22. And I remember in class this guy said, you know, what should I do? How should I succeed? And he's just like, yeah, but what do you want to do?

6:38I just want to conquer the world and everybody applauded. And for me, it was just like a complete unreal situation. Did you adopt that mindset from that? No, I haven't. I don't really have that mindset. There was an element of that, which I thought was pretty cool. So for a child of your own or for a young person asking you for advice, What would you say to them about doing an MBA? Well personally I'm not a big believer in MBAs, except if you have some kind of job and need to change direction and you feel that you know I'm in the wrong place, I just need to complete to do something else. Then an MBA is good, it's good as a kind of shifting mechanism.

7:10But in itself I think not so necessary. When you decided to join your role now, was it an easy decision to leave your prior which you started and join a CEO? Yeah it was so difficult actually because I was on my way to do something else. I had started a hedge fund, been running it for 15 years. The learning curve was a bit flatter and I had decided to kind of move on, pass on the firm to the next generation and then go back to university and study. And then this job came up in the Sovereign World Fund and I thought, you know what, this is just incredible. Combine in my love for as -and -management, organizational development and then do something good for the country.

7:43That was not so difficult. But it wasn't easy to get the job right? What was the process to be seen? You have to have to larger so - Well, you apply and you go through a lot of interviews. And then of course, the local media was a bit skeptical because nobody knew me. And the Harris is a non -guy coming from London and it's a very prestigious position in the country and it's not so. Yeah, it just wasn't so straightforward. Did the enormously of the position hit you? As we said, it is the largest in the world. I don't think it's really ever hit me because it's a very large fund. But I don't think about the size of it because the size is kind of unreal.

8:19So do you know what I love it? It's on your website. You have the ticker. Yeah, and I mean, it's it's insane Yeah, it's insane. So it's so it's a sticker showing the real estate Absolutely, so it's we are there is a ticker on the website. It shows the the real real time value of the fund And I thought before I joined it's just like you know what? This is not a good idea This makes us very short -term in all thinking we should get that this way now if we are taking that away from the website There would have been a revolution in the country that would have hated it it's the most watched number in the country.

8:49It's very, very important. And it's kind of cool. What it also does, it just shows how transparent the fund is. There are no secrets. Everything is open. Everything is out there. I've watched many of your interviews where you've interviewed some and then somewhere you've been interviewed and you've said before that we might have some lackluster returns actually for the next few years because of the environment that we're in. So look, given the importance of that number to the country and it being the most watched number, is there a lot of pushback? Is there a lot of anger about a very kind of open listen, there will be that last of returns and that's what it is?

9:21No, I think they like the fact that we do some expectation management. It's important to manage expectations. I truly think there will be much tougher times ahead. I think it'd be difficult to generate returns and everybody needs to know that. Why is it going to get so much tougher? A lot of people are feeling optimistic. Personally, I think it would take longer for rates to come down. I think there are geopolitical tensions which add to inflation? Why will it take longer for raise to come down? Because there was some underlying wage increases and then when companies have to pay higher wages, they offset that by increasing their own selling prices.

9:56And then you have some climate effects, you know they're worse harvests, you have some geopolitical effects, there is more producing things close to home which is more expensive. So just have a lot of things like that pulling in the same direction. Okay and so these kind of underlying inflation in pressures create a challenging environment going forward. Is that like a three -year period, just like a five -year period in your mind? When does that change? I think it could last for quite some time. Like ten years? I don't know. I think the next five years could be, could be much more difficult. How does one change their investing as a result of that?

10:26I've been coming more long -term by focusing in on quality companies which can compound by looking for marketer gainers and by becoming more contrarian. So taking the opportunities that comes from volatility. I always love wine buffets investing style, which is, you know, I invest in things that don't change over time. People will always love like a Mars bar or ketchup or whatever that may be. Or Coca -Cola. Or Coca -Cola. When you think about market share gainers, what does that mean to you? Because one would say Google, but some would say ChatGPT, you've spoken some challenges that. Yeah, I think so.

10:59I'm not really thinking about technology because that's a bit too complicated for me. I mean, that's because Is that change so fast? And God knows who's going to be the winner in NAI or chips or these kind of things. I'm more thinking about kind of steady -eddy market share gainers. Cosmetics company which takes half a percent market share every year or things like that. Does that not get threatened by technology too? It is a world not becoming... Well, I think some companies and some products are not threatened by technology. I think for instance, look at cosmetics. You know, women have painted themselves in a phase for 2 ,000 years.

11:28Do you think they would stop? Do you think all women would say, listen, now we're going to have a level playing field. nobody's ever going to use any cosmetics. I just don't think there are and I think it's tied into it's tied into vanity. So for instance there I don't think technology will move it. Now an elevator company are we going to invent a way that the way we need to move up in the building? I just don't think so. I think we'll always need elevators. I agree on the elevator. So I got nothing for you on that one. On the makeup, you know TikTok shop enables creators to create their own brands.

11:57Absolutely. Absolutely. Absolutely. Being a really unbundled so much of LVMH or any of the large providers market share. Yeah, well, I just think that when the brands become pretty big, they will be acquired by the very large companies. And you see it, for instance, in a spirits business. So, you know, let's say you're a good looking actor, you launch your tequila brand, Los Amigos or whatever it's called. And when it reached a billion, somebody's going to buy it. You know, I watched one of your shows. I think it was Davos where you were interviewed and you said, yeah, the question I like to ask is, what's on your mind?

12:28And I was like, why don't we turn the tables? What's on your mind? You know, just now I, I've been thinking a lot about, we must not make small problems big. In other words, some really small problems in life, and we are just making them big, but equally there are some really big problems, and we must not make them small. What do you think of the small problems? So just like the everyday small tiddly things which take up too much time, too much of your thinking, not important things, and you should not be spending time on it. And there are some big things. something, climate, big issue, very big issue, and for sure we are not spending enough time on it.

13:03Is the time horizon challenging for you? Because you invest along such a long time horizon. So time is really interesting. I think it's really funny. So let's say you are 20 years old. You are in such a hurry, okay? Like three months, it's at eternity. Now, you get older, I'm 57, I'm soon about to die. Suddenly I'm so patient. Why? I mean, I haven't got that many years left compared to a 20 year old. Yet I'm much more patient than these young person. Why is that? It makes no sense. So your time horizon changes when it shouldn't. It should be opposite. Are you scared of dying? No. Absolutely not.

13:38But the thing about time, I think, is just really interesting. I don't think we haven't really nailed the whole concept of time. And now why are you more impatient when you are 20? Well, three months is a high up percentage of your life than when you are 50. You've seen longer time. You've seen that it pays off to be long -term. But if I would tell myself something my 20 year old self, what should I learn? You know, you've got so much time, you know, just think more long -term. Speed of execution we always told is like the biggest difference between those that win and those that don't. And with that in mind, I very much think that time is crucial and I have to get as much out of every single day.

14:14It was a different from thinking long -term. I completely agree. Organizations which make fast decisions are generally better organizations. I have a countdown clock in my office showing how many days I've got left or my job because this is a five -year job. I've got 580 days left. Now why do I have that? Is it because I don't like my job? No, I love my job. But the thing is that when I got somebody in my office who says, yeah, we can do this next, over the next three months we can do it. I said, hey, listen to that. Look at this. I got 580 days left. We need to hurry up. And they say, oh gosh, yeah, you only have 580 days left.

14:46We need to do it straight away. So you're completely changed the mindset and you get this urgency into thinking Do you think that five year tenure is a good thing or a bad thing? Because it doesn't prevent long -term thinking like you well, I think it has got positive things and negative things I think on balance is probably neutral. Do you feel the pressure? I think I would have felt the pressure even if I had a tenure when you think about like how others in Tov and Well funds do and engage in what they do who do you respect and why there are a lot of very good funds out there, right? You have the Canadians, they are very strong, they are long -term thinkers, they have good organizations, you have something like GIC and Singapore, it's very strong.

15:25I would say what I admire in funds is when they are transparent, the Norwegian fund is the most transparent fund, and I can say that because we won the awards for being the most transparent fund in the world, so I'm not even bragging as much as I'm in fact. It's good to be transparent. Everybody is on the same page. Everybody knows what's the agenda, what we're driving for, what we're trying to achieve, and it establishes trust. I don't know, it assumes everyone has the same IQ and EQ, and actually sometimes people need to be encouraged along and maybe not know the whole truth, because I don't think actually a lot of people are as good as we've given credit for.

16:00Wow, I mean, to disagree here, I think the more people know the truth, the better it is. The more everybody knows all the facts about it is. When you think about, I love this, you asked it with, I think it's Jane, the CEO of And you said, if you would have really have one or two numbers which measure the health of the economy, which one or two are they for you Jane? And I was like, that's a good question. If you have that same question, how do you respond to that? Well, so what I look at is how much fair and how much greediest they're out there. How do you measure that? Well fair, you can measure in the Vix index, the volatile index, you can measure during In COVID, you can measure it in the amount of media on the bad news, to which extent specialists disagree with each other, while other doomsday scenarios and so on.

16:45So you can get a gauge for the fear. And gee, did we have a lot of fear at the beginning of COVID when we didn't know what it was? That's not so difficult to measure, but it's an important one to keep track of. But then, you know, greed, how do you measure that? That's much more difficult to gauge. And frothiness. And to try to get your handle on that, that's really important. And so I'm wondering now, over the last two, three days, the share prices of RM has gone up 150 % or whatever it is, something very, very high number. And what is that? Is that some kind of peak of sentiment for tech shares or what is it?

17:16I don't know, but I'm thinking about that. How do you think about measuring greed then? Well, you just have to look at what's going on in society. When you feel really stupid because you haven't made 100 % return in the stock market because all your friends have. Then you have to start to think. It's just when things start to look really, really simple. Then there is too much greed because it's just not simple to make money. Do you think greed is bad? I'll not per se, not per se. I mean, greed is what drives a lot of people. Greed is a negative word for aspiration and wishes for a better life.

17:50And so the word greed is a negative word. But the wish to create things to make the world a better place, all these kind of things, that's positive. It's supposed to drive. I mean, it's cool that people want to establish things and make things and show the world what's the biggest constraint that you have because of your position. You would like to remove them. What would you do if it were removed? Yeah. I don't feel we have much constraints. So, you know, we're a large fund. We are a public sector fund. For the moment, we cannot invest in private equity, which I think we now have this political discussion and we have arguments back and forth with the Ministry so so we'll see what comes out of that.

18:29How does decision making work around that? It's a political process so the Ministry is asking us for advice, I the board of the Central Bank, then they give advice, then they go through the political process and discuss it with the politicians and then they come back with a white paper. So it's a it's a very thorough and and really solid and impressive work. He said central and I saw on one interview that you said, you hope that central banks change the type of data that they use to inform that thinking. How so? And how would you like that? Yeah, so I need to be a bit careful when I talk about central banks, because we are situated in the middle of central banks.

19:04So when I talk about central banks and never talk about the Norwegian central bank. But I think it's interesting to look at the central banks and I have previously said that I thought they were a bit slow to increase rates. Now I think that's the opinion that many people have and they have admitted it themselves. So I don't think it's particularly controversial to say. And to me, the question is just like what kind of alternative data do you use? Do you speak to the CEO of companies and ask them what they expect for the next 12 months? And historically they haven't necessarily done that. I think they probably will do it or are already doing it more.

19:33And perhaps they will improve for the decision making. I spoke to a couple of mutual friends and they said that your content consumption is extremely voracious. And you mentioned being so engaged in reading when you were young. What is your content consumption that like Stain and Coliseum? you have to be across so many things. The important thing with learning is that you need to be curious and you need to learn as many different things as you can from as many different type of people. When you look at the social psychology studies on this, the more different type of friends you have, the more innovative and the more creative you become.

20:06Very, very important. Now I consume a lot of newspapers, I do listen to podcasts, and I also learn a lot from my own podcast because it forces me to prepare for various industries and various CEOs and so on and it's a very, very important part of learning. Do you do the prep yourself? I get help from the great analysts who I work with but I also prep myself. So I sit during the weekends and I think it's really, really cool, right? That's why to learn, right? I didn't talk so much. Absolutely. So before we had Daniel Egg, who's put a fire on, I have to learn about the music industry. I didn't know so much about it and before we had an VDR CEO, well, I had to learn about microchips.

20:43And so it's just a fascinating learning experience. or Bill Gates, you have to learn about a lot of things because he knows so much about so many things. What was the best guest? He can say it's just... No, I think we've had a lot of really, really good guests. Oh, come on. You can give me one. Is yours? Peter Fenton from Bunchmark would be up there, or Doug Leone from Sequoia Capital. He's run Sequoia Capital for many years. Mark Benioff from Salesforce was fantastic. And why were these people good? Different reasons. Doug Leone really understood the art and science of what makes a great interview.

21:13you. The art is bringing people in with a story. When I was doing this and I felt this, people feel like they're with you. But then he tied it to science. And from that experience, I learned three cool things to change how I think about pricing assets. He tied art, resonance, to science learning in a way that I think was very, very special. That's good. Far enough. When you think we were spoken about kind of Nvidia, you mentioned there, we spoke about Microsoft. How do you think about US tech firm concentration. It is so concentrated. Yeah, I've just loved hearing thoughts on that. Well, it's very concentrated and you know, you have the market cap of individual companies which surpass the market capitalization of all the Swedish companies for instance.

21:55So they are bigger than singular countries. I don't think it's good or bad. I think it's just a function of this being a platform economy where if you own the platform and you have this ice, you just gain more size. Everyone says in every cycle there's incumbents and you know this is no different and they can always be challenged. Honestly to me this feels different because in a lot of cases the data advantage that they have and the sheer scale that they have is just bigger than ever. Nokia when it was at its height did not have the scale. No, the Microsoft does. No it's interesting so now for instance in AI it takes it's so expensive to develop new models that if you're not already a big company you have difficulty doing it.

22:35There is an argument for this continuation of the winner takes it all just continuing. I just don't know. How do you think about investing in AI super aggressively? You are primed, positioned wise, to actually say, hey, we can become a market leader, we can take a very forward approach, we can take a very long time horizon. Well, we are quite close to the index the way we invest to we, but all in all the big companies, you know, our biggest position is Microsoft, very big positions in Nvidia, AMD, Alphabet, you name them, we have those over biggest positions. Would you do sand, knee, seven trillion dollars?