Whig Capital Management Pty Ltd is a private investment company located in Melbourne, Victoria. The company seeks to identify long-term investment opportunities from the mispricing of policy, political and sovereign risk. It applies a ‘classical liberal’ framework to issues of political economy and a value investing method to business evaluation.
Mr Jordan J. Shopov is the company’s sole founder and Managing Director. Prior to Whig Capital, Jordan worked in a variety of roles across law, public policy, business and consulting. He attained both his Bachelor and Master of Laws from Monash University, and is admitted to practice law by the Supreme Court of South Australia.
First popularised in seventeenth century England, the term Whig referred to a group of political revolutionaries who fought for the supremacy of parliament over the Monarchy. Their eventual triumph became known as the Glorious Revolution of 1688. A century later, those same rebels were a key inspiration for many American patriots in their war for independence. Motivated by liberal and constitutional ideals, both English and American Whigs helped lay the institutional foundations that have enriched the Western World.
Since the Enlightenment, many of history’s greatest thinkers have subscribed to Whig principles. Men such as Adam Smith, David Hume, Thomas Jefferson, James Madison, Edmund Burke, Alexis de Tocqueville, and more recently, F. A. Hayek and James Buchanan. As Hayek himself concluded, “The more I learn about the evolution of ideas, the more I have become aware that I am simply an unrepentant Old Whig”. The name Whig Capital pays homage to these heroes, their ideas and our shared belief in constitutional liberty.
Virtue is excellence, something uncommonly great and beautiful, which rises far above what is vulgar and ordinary – Adam Smith.
Focus > Courage > Resilience > Mastery
“It is hard to fail, but it is worse never to have tried to succeed. All daring and courage, all iron endurance of misfortune, make for a finer and nobler type of manhood” – Theodore Roosevelt
“The bright path seems dim / going forward seems like retreat / the easy way seems hard / the highest virtue seems empty” – Lao Tzu
It is an emotional quality that separates the few who master a field, from the many who simply do a good job. That emotional quality is fortitude. Our levels of desire, patience, persistence and confidence play a much larger role in success, than intelligence. We value fortitude because it’s the only means of mastering our chosen field. Fortitude begins with a clarity of focus; an ability to channel all of our physical and mental energies into the problem at hand. The problem of: how best to create value in the world.
Fortitude also means courage. A desire to tackle unsolved problems, test our skills, and to act decisively in the face of uncertainty. It means a willingness to sacrifice, look foolish and suffer the criticism of our peers. In other words, we value an appetite for risk. We dare to risk our time, money and effort to create something greater than ourselves. Fortitude also means a resilience toward the vicissitudes of business and life. Long-term investing demands a high degree of patience and dedication. A steadfast resolve to wait for the right opportunities at the right price. And to ride out the inevitable bumps over an investment’s life. As Charlie Munger says, “the big money is not in the buying or the selling, but in the waiting”. Such perseverance is also critical to learning. A taste for mistakes and failure is what leads to knowledge and progress. Fortitude, therefore, means a willingness to resist discouragement, to take the blows of life as they fall, and to go from one failure to the next, with no loss of enthusiasm. Ultimately, it means a stoic constitution. One that transforms pain into progress, fear into courage, and desire into action.
Character > Authenticity > Trust > Collaboration
“It is chiefly to my confidence in men and my ability to inspire their confidence in me that I owe my success in life” – John. D. Rockefeller
“The great man is he who in the midst of a crowd keeps with perfect sweetness the independence of solitude” – Ralph Waldo Emerson
Important business accomplishments are impossible without collaboration. The great industrialist, Andrew Carnegie, famously said he wished to have inscribed on his tombstone: “here lies a man who knew how to enlist in his service better men than himself”. Cooperation stems from an ability to inspire the trust, confidence and commerce of honourable and like-minded people. It demands integrity. Integrity is at the heart of all long-term business partnerships. We believe it begins with a certain strength of character. A level of ownership, freedom and understanding of one-self. One that naturally abounds from the discovery of our unique mission or vocation in life. As Da Vinci said: “there can be no smaller or greater mastery, than mastery of oneself”.
Integrity is also about establishing a reputation for honesty and authenticity; a lack of contradiction between personal values and life choices. This is no easy task. Being true to oneself often involves breaking away from conventional norms, attitude and behaviour. Integrity is not just doing things right, it’s about doing the rightthings. As such, we are uninterested in winning any popularity contests. We view all forms of marketing – outside of timely and accurate information – as an exercise in bad manners. Instead, we believe the best way to get what you want in life is to deserve it. To treat people with frankness and openness; in the hope that they will trust the person who seems willing to trust them. And believe that every man, regardless of stature or education, deserves to be treated with dignity and respect. We seek to empathise rather than criticise. Listen rather than shout. Persuade rather than impose. And always pick substance over status. We aim to take responsibility for our mistakes and admit when we are wrong. And believe that keeping our distance from an ignorant person is equivalent to keeping the company of a wise man. Ultimately, we seek to conduct ourselves knowing that it can takes years to build a reputation, but only minutes to lose it.
Curiosity > Erudition > Skepticism > Judgment
“To understand the future, all you need is some respect for the past, some curiosity about the historical record, a hunger for the wisdom of the elders, and a grasp of the notion of heuristics” – Nassim Nicholas Taleb
“The best and most practical wisdom is elementary academic wisdom. But there is one extremely important qualification: you must think in a multidisciplinary manner” – Charlie Munger
Investing is about allocating capital today, to receive more of it tomorrow. The inherent cloud of potential outcomes is what shapes the risk and uncertainty of any investment decision. As noted by Howard Marks, “risk can only be dealt with by skilled individuals making subjective judgments about the future”. We believe sound judgment requires a certain temperament, rather than a high IQ score. It demands wisdom. We believe wisdom is the key ingredient to taking intelligent risks for profit.
Wisdom flows from a curious mind, love of knowledge and dedication to lifelong learning and improvement. It begins with a respect for the lessons of history. A desire to master those important truths that have already been discovered. We therefore seek to build a collection of mental models – the big ideas that underlie reality – as well as a generalist and multidisciplinary skillset. One that was more commonly cherished during the Renaissance. Scholars of that period had much broader interests than academics of today. They were accomplished in both the arts and sciences and strove for an ideal of the “Universal Man”: a person so steeped in all forms of knowledge that his mind grows closer to the reality of nature itself; revealing secrets invisible to most.
We aim to balance our knowledge with humility to recognize its limits. As Mark Twain said, “it ain’t what you don’t know that gets you into trouble. But what you know for sure, that just ain’t so”. Humility forces us to think critically, to differentiate between luck and skill, and admit the limit of our competency. It means adopting a sceptical empirical approach: an understanding that improbable and unthinkable events not only happen more regularly than we assume, but disproportionately impact the course of history. We believe the greatest contributions to knowledge consist in removing what we think is wrong, rather than confirming what we already believe. And that risks can never truly be known, only estimated. Ultimately, we believe an investor may only sense when the return adequately compensates the risk, by having gained a unique and unusual insight about the world.
Discipline > Reason > Frugality > Virtue
“He is happiest who advances more gradually to greatness, whom the public destines to every step of his preferment long before he arrives at it, in whom, upon that account, when it comes, it can excite no extravagant joy, and with regard to whom it cannot reasonably create either any jealousy in those he overtakes, or any envy in those he leaves behind” – Adam Smith
“The difference between the character of a miser and that of a person of exact economy and assiduity: one is anxious about small matters for their own sake; the other attends to them only in consequence of the scheme of life which he has laid down to himself” – Adam Smith
We value prudence as the guiding light to prosperity, virtue and business success. By prudence we mean the ability to use reason, self-command and industry. Alongside our natural desire and quest for betterment, we have a duty to faithfully serve the interests of our clients, partners and shareholders. We therefore seek a certain level of morality and justice in the execution of our practical affairs. We abhor the taking of undue risk and subscribe to a more calm, sober and dispassionate investment approach. We seek to understand and control the full extent of our prejudices and biases. Accept that no-one is right because others agree with them; only because their facts and reasoning are sound. And recognise that the less prudence with which others conduct their affairs, the greater prudence with which we should conduct our own.
Prudence also means playing a long game. Of building wealth slowly through frugality, discipline and industry. It means eliminating waste and unnecessary debt. And avoiding the “ABC’s of business decay”: arrogance, bureaucracy and complacency. In essence, it is subscribing to a principle of delayed gratification. Of sacrificing ease and enjoyment of the present, for still greater ease and enjoyment of the future. Such frugality is not only the immediate cause of all increases in capital, but the foundation of our industry and economy. It enables us to ride the unyielding tide of Einstein’s eighth wonder of the world – compound interest. Ultimately, we value prudence not for want of riches and greatness, but because it appeals to our own sense of good conduct. A desire to achieve success in the most judicious, modest and conscionable manner.
Passion > Openness > Synthesis > Ingenuity
“New ideas are not generated by deduction, but by an artistically creative imagination” – Max Planck
“The intuitive mind is a sacred gift and the rational mind is a faithful servant” – Albert Einstein
The identification of unique business opportunities requires a certain level of ingenuity. It demands an entrepreneurial mindset that is constantly seeking to unlock the boundless value of potential human exchange. In the words of Amos Tversky, it is about “seeing what everyone else can see, but then thinking what no one else has ever said”. We believe creativity and ingenuity begin with passion. That individual flare, tenacity and vigour, which innately flows from the subjective part of our brains. Creative thought is not a simple inductive process. It is the result of an artistic and speculative imagination.
John Maynard Keynes famously said: “the difficulty lies not in the new ideas, but in escaping the old ones”. In this sense, creativity, is about open mindedness. An adaptable and flexible spirit that encourages experimentation and honest interpretation of new data. It means a willingness to explore new ideas, people and experiences. The humility to tear down what we already know, for the sake of development and progress. Openness is what enables novel and unlikely connections between disparate fields of knowledge. A synthesis of conflicting viewpoints into a unique and compelling vision of the world. Creativity, therefore, is a form of evolutionary hijacking. One that understands how everything interacts organically. Our aim is to deploy these intuitive faculties to discover more and more ways to create value in the world.