Call it bad luck or misjudgment, but James Packer hasn’t always caught the breaks in business. But in pocketing $3.3 billion from the sale of Crown Resorts in the middle of a historical sharemarket rout, he has been shot by a rainbow.
This is Packer’s chance at investment renaissance – a fresh slate, a full wallet and a new inner sanctum of close advisers including Australia’s highest profile and (now) former fund manager Hamish Douglass.
Douglass, who recently resigned as an employee of the fund management business he co-founded, Magellan, is now free to sit on what Packer is calling his “investment committee”.
Douglass has also signed up as a consultant to Magellan – but clearly, this isn’t an exclusive gig. It is understood the terms of his contract with Magellan allow Douglass to pursue other roles but not with rival fund managers.
During his time as chief investment officer of Magellan, Douglass had taken big bet high conviction positions in a small number of stocks – some of which had significantly underperformed over the past year.
When several of Magellan’s clients pulled out and funds under management fell precipitously, Douglass’ personal life became entwined with the fortunes of the business and he withdrew from the company and public life.
In a sense, getting in on the ground floor of a new chapter in Packer’s business evolution also allows Douglass a clean sheet of paper.
Packer and Douglass have been friends for several years with Packer having been an early investor in Magellan. That said, Packer readily admits he sold out too early and left a lot of money on the table.
When Douglass copped an immense amount of criticism for the underperformance of Magellan, Packer was likely empathetic to his plight and the emotional toll endured from being in the public spotlight.
The extent to which Douglass will participate in the architecture of Packer’s new investment portfolio remains to be seen but it is likely to be in the listed company space.
Packer has a long history of relying heavily on a small coterie of advisers in whom he has placed enormous trust, belief and autonomy.
Several of these relationships with Packer have either become strained or soured.
Over 30 years they have included former Consolidated Press boss and Crown chairman John Alexander plus Robert Rankin, a former investment banker who ultimately became and was another Crown chairman, who was at one time Packer’s right-hand man. This ended in divorce.
Even earlier in Packer’s career, together with Lachlan Murdoch, he put his trust in Jodee Rich and invested in his fledgling telco OneTel – that ended up in a particularly expensive divorce.
Investment banker Matthew Grounds was part of Packer’s inner orbit for many years and this partnership is ostensibly estranged.
At least one of the long-term Consolidated Press Holdings executives, Guy Jalland, will remain on Packer’s investment committee. But it is the addition of an artificial intelligence guru Daniel Nadler to Team Packer which provides the best insight to where Packer’s funds could be directed.
Nadler, who founded Kensho Technologies and sold it in 2018 for $US550 million and attracts the label “futurist”, has been described as “scary smart”. It seems Packer has developed a particular fascination for AI.
Despite the Packer family having made the lion’s share of the family fortune in traditional media and casino businesses, he has invested in many disruptive technology businesses including Seek and Carsales in Australia.
Packer timed his exit from traditional media well and unsuccessfully attempted to sell out of Crown in 2019 and engineered Crown’s retreat from Macau at an opportune time.
In an interview over the weekend, Packer said the next chapter in his life would involve rehabilitating his reputation and, more remarkably, a return to public life.
“I’ve made too many mistakes and I’ve got some big things right, too. But I have played the game, be it in the media in Australia or with Crown, I’ve played the game and rolled the dice,” he said. “I’m feeling excited about starting my Act 3 … my Crown chapter is over,” Packer told The Australian.
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