Hedge Fund Star Guiding $1.3 Trillion in Norway Talks Talent
At the end of his working day, the chief executive of the world’s biggest wealth fund can often be found on his sofa, eating a pizza and responding to students on LinkedIn. They’re keen to pick his brain on all kinds of things, and he likes sharing his thoughts.
Nicolai Tangen, the 54-year-old hedge-fund star who now manages a $1.3 trillion portfolio for Norges Bank Investment Management, is trying to define what it takes to invest well today. Greed is out, diversity and climate goals are in. That means employers like Norway’s wealth fund need to cast a wider net when they search for talent.
“Diversity isn’t about politics, it’s about logic,” Tangen said in an interview.
Since starting in September, Tangen has dazzled Norwegians with his unorthodox approach to running the oil-rich country’s giant piggy bank. Aside from posting videos of himself cooking and chatting with young people on LinkedIn, he’s reorganized the fund’s top ranks and exposed portfolio managers to some less conventional forms of training.
Shortly after taking over, Tangen reduced the size of the fund’s C-suite, and brought in more women to its previously male-dominated ranks. He also set a target that at least a third of all top jobs must be held by women, and is putting pressure on portfolio companies to pursue similar goals. Last year, 44% of new hires at the fund were women.
Tangen then turned to his portfolio managers. He brought in a sports psychologist who trains military pilots to coach managers at the fund and get them to feel more comfortable taking risks. Earlier this year, the fund announced it was developing a tool to help asset managers learn from mistakes by simulating extreme stress scenarios.
Tangen is also interested in how forensic linguists can help analyze corporate-speak on conference calls, to catch nuances of inflection and word choices that might reveal something. (His own background includes interrogation training with the Norwegian intelligence service.) The fund hasn’t yet hired any forensic linguists but it’s already brought in forensic accountants to trawl through reports by portfolio companies.
The purpose of such changes, Tangen says, is to make sure that he and his team make the right decisions in a world that’s growing increasingly volatile and unpredictable.
Though Tangen grew up in a small town on Norway’s southern coast, he was initially treated as a bit of an outsider when he returned to his country of birth. His time as a London-based hedge-fund boss known for his jet-set lifestyle left union bosses and a number of politicians uneasy. His contract as CEO had to be adjusted more than once to make sure the wealth fund wasn’t exposed to any conflicts of interest stemming from his past life.
Knut Kjaer, the founding CEO of Norway’s wealth fund, has described it as a stroke of luck that Tangen agreed to take the job. Shortly after the appointment was announced, Kjaer said it was “difficult to imagine someone more qualified.” By December, Norwegians seemed to agree, and local media were nominating Tangen for “person of the year” awards, though he didn’t quite make the cut in the end.
Tangen has said that someone in his position “needs to be used to, and capable of, being unpopular.” He’s had a somewhat off-the-beaten-track education to prepare him. Aside from his career in finance, he has degrees in art history and social psychology, and is a qualified chef.
“I studied decisions in social psychology, like how do you make good decisions? Well, you get as many different opinions as possible into a discussion,” Tangen said. “If you have more opinions in a discussion, you get better innovation, you think of things you wouldn’t think of otherwise. You come up with better solutions that ensure that you make more money.”
After spending much of his adult life in London, where he founded his hedge fund AKO Capital LLO, Tangen says portfolio management today isn’t what it was 10 years ago, and he wants the profiles of his staff to reflect that. A big part of that is technology and Tangen’s even gone so far as to call the wealth fund “an IT business.”
To bolster the fund’s defenses against cyberattacks, Tangen has shown a readiness to bring in people without any formal education, and even invited them to try to hack into the investing behemoth’s systems. The fund recently recruited people in Singapore and New York who didn’t have college degrees.
The Good Contrarian
A quality Tangen seems to respect less is conformity. “You need the ability to go against the flow,” he said. “It’s good to be a contrarian, and you have to deal with holding unpopular views.”
“If you’re going to make money as an investor, you have to do something that’s different from everyone else.”
The wealth fund’s head of HR, Ada Magnaes, who sat next to Tangen throughout the interview, says it’s also about identifying people with “mental strength,” which has been particularly relevant during the pandemic. The fund recently announced it was giving staff the freedom to continue working from home two days a week after the Covid crisis is over. “And mobility across our offices is also something that’s hugely attractive for a lot of people,” she said.
After laying out his world view, Tangen tries to balance everything he’s just said and points out that regular portfolio managers with conventional degrees are still very welcome.
“We shouldn’t be overly dramatic about this,” he said. “We also hire traditional financial professionals,” not just people who “think outside the box, but also people who think inside the box.”
“This is an organization with lots of different facets, and with lots of different functions,” Tangen said.
And hiring “is the most exciting thing we’re doing,” he said. It’s “how we shape the future.”