Winning by Not Losing in the Nedgroup Contrarian Value Strategy

Brian Selmo, Portfolio Manager of the Nedgroup Investments Contrarian Value Equity Fund and the Nedgroup Investments Global Flexible Fund, recently joined Morningstar’s The Long View podcast to share deep insights into the team’s investment philosophy and process.

The conversation revealed the foundational thinking behind the funds managed for Nedgroup Investments, an approach grounded in valuation discipline, skepticism, and long-term pragmatism.

Below are a few highlights from the interview that we thought would be of interest:

Navigating an Uncertain World: Preparedness Over Prediction

“You can’t really know anything for certain…you prepare for any manner of eventualities.”

Selmo draws on Robert Rubin’s In an Uncertain World to frame the team’s core mindset: uncertainty is inevitable, but unpreparedness is not. Instead of attempting to forecast market events or economic cycles, the team builds portfolios that can perform through a variety of scenarios.

This mindset is reflected in both the Contrarian Value Equity and Global Flexible Funds. The goal is equity-like returns with less risk over time, achieved by holding a variety of securities that respond differently depending on market conditions. Rather than reacting to headlines or short-term events, we stay focused on fundamentals and intrinsic value. This approach has effectively positioned the funds to remain resilient amidst market volatility over various cycles.

People First: The Role of Leadership in Long-Term Outcomes

“It’s hard to overstate how important the people are running a business… That’s where our investigative journalist comes into play.”

In the podcast, Selmo shares a compelling example comparing JPMorgan and Citigroup in the mid-2000s. Both large, established banks, but with vastly different outcomes due to one key factor: leadership.

JPMorgan thrived under Jamie Dimon; Citigroup struggled without him.

Recognising the outsized impact that management can have on long-term shareholder returns, we incorporate a unique layer into its research process: Scott Cendrowski, an investigative journalist and former Fortune magazine reporter, who has been with FPA for over 15 years.

Scott brings a forensic level of due diligence to every investment idea. He conducts in-depth background checks on key executives, interviewing former colleagues, competitors, and associates to uncover behavioural patterns, cultural red flags, and qualitative leadership traits. This “people-first” analysis complements the quantitative work done by the investment team and is a differentiator in how both funds managed by the team are constructed.

This is a unique feature highlighting our active management style and differentiated research, and quality assessment process.

Cyclical Opportunities: The Vail Resorts Case Study

“We had an opportunity to buy what we think of as a unique trophy asset in Vail Resorts at very undemanding prices.”

Vail Resorts, owner and operator of some of the most renowned destination ski resorts in the world, serves as a vivid example of how the team takes advantage of market dislocations. Despite fears around climate change affecting ski resorts, our research uncovered that ski days at Vail have actually increased over time, supported by best-in-class snowmaking infrastructure and superior capital investment.

Selmo explains that the business trades at 8–14× earnings, redistributes most of its cash to shareholders via buybacks and dividends, and owns scarce real estate-like assets. The investment thesis is simple: long-term demand for experiences like skiing is durable, and supply of quality ski resorts is effectively fixed.

This is one of many examples showcasing how the team identifies undervalued cyclical businesses with durable moats and cash return discipline.

Culture and Risk Awareness: Steve Romick’s Enduring Influence

“Steve is very big on the ‘look down’ idea…always understand the bear case first.”

In the interview, Selmo pays tribute to Steve Romick, FPA founder and long-time colleague, who instilled in the team a persistent focus on risk. Romick’s background in short selling led him to emphasize the importance of stress-testing every investment idea: What could go wrong? How would it affect the overall portfolio?

This philosophy remains a bedrock of our approach to portfolio construction and downside mitigation in both the Contrarian Value Equity and Global Flexible Funds. It’s not just about generating strong returns, it’s about delivering those returns with a smoother client experience across market cycles.

This narrative reinforces the team focus on downside awareness, capital preservation, and investor alignment.

Throughout the podcast, Selmo underscores a consistent theme: FPA’s approach is based on long-term thinking, fundamental analysis, and skepticism of the consensus. Whether it’s deciding when to deploy capital, choosing which companies to back, or holding cash during periods of exuberance, the team follows a repeatable process designed to generate value over time.

Get performace history and other fund information here: Our funds.

Disclaimer:

This is a marketing communication. Please refer to the prospectus, the key investor information documents (the KIIDs/PRIIPS KIDs) and the financial statements of Nedgroup Investments Funds plc (the Fund) before making any final investment decisions.

The documents applicable to the Fund are available from Nedgroup Investments (IOM) Ltd (the Investment Manager) or via the website: www.nedgroupinvestments.com.

This document is intended for information purposes only, it is not intended for distribution to any person or entity who is a citizen or resident of any country or other jurisdiction where such distribution, publication or use would be contrary to law or regulation. The views expressed herein are those of the Investment Manager / Sub-Investment Manager at the time and are subject to change, and whilst all reasonable steps were taken to ensure that this document is accurate and current at the time of publication, we shall accept no responsibility or liability for any inaccuracies, errors or omissions relating to the information and topics covered in this document.

The Fund is domiciled in Ireland, authorised and regulated by the Central Bank of Ireland. The Fund is a UCITS pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 as amended. Nedgroup Investment (IOM) Limited (reg no 57917C), the Investment Manager and Distributor of the Fund, is licensed by the Isle of Man Financial Services Authority. The Depositary of the Fund is Citi Depositary Services Ireland DAC, 1 North Wall Quay, Dublin 1, Ireland. The Administrator of the Fund is Citibank Europe plc, 1 North Wall Quay, Dublin 1, Ireland.

The sub-funds of the Fund (the Sub-Funds) are generally medium to long-term investments and the Investment Manager does not guarantee the performance of an investor's investment and even if forecasts about the expected future performance are included the investor will carry the investment and market risk, which includes the possibility of losing capital.

The price of shares may go down or up depending on fluctuations in financial markets outside of the control of the Investment Manager meaning an investor may not get back the amount invested. Past performance is not indicative of future performance and does not predict future returns.

Risks and fees are outlined in the relevant Sub-Fund supplement.

Prices are published on the Investment Manager’s website.

Distribution: The Investment Manager may decide to terminate the arrangements made for the marketing of its collective investment undertakings in accordance with Art 93a of Directive 2009/65/EC and Art 32a of Directive 2011/61/EU.

Switzerland: The Representative is Acolin Fund Services AG, Maintower, Thurgauerstrasse 36/38, 8050 Zurich, whilst the Paying agent is Banque Heritage SA, Route de Chêne 61, CH-1211 Geneva 6. Nedgroup Investments (IOM) Limited is affiliated to the Swiss ombudsman: Verein Ombudsstelle Finanzdienstleister (OFD), Bleicherweg 10, CH-8002 Zurich.

Germany: The Fund’s Facilities agent in Germany is Acolin Europe AG, with the registered office at Line-Eid-Strasse 6, 78467 Konstanz. The Prospectus (in English) and the PRIIPS KID (in German), may be obtained free of charge at the registered office of the Facilities agent, or electronically by Email via facilityagent@acolin.com, or by using the contact form at https://acolin.com/services/facilities-agency services.

U.K: Nedgroup Investments (UK) Limited (reg no 2627187), authorised and regulated by the Financial Conduct Authority, is the facilities agent. The Fund and certain of its sub-funds are recognised in accordance with Section 264 of the Financial Services and Markets Act 2000.

Isle of Man: The Fund has been recognised under para 1 sch 4 of the Collective Investments Schemes Act 2008 of the Isle of Man. Isle of Man investors are not protected by statutory compensation arrangements in respect of the Fund.