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When I was an investment manager at a multi-family office, my job was to scrutinise asset managers. I learned quickly that a firm’s true strength is rarely found in a single star manager but rather in the depth and resilience of its investment team.
When I first studied at Peregrine Capital, South Africa’s oldest hedge fund manager, it was clear that its advantage was built on something durable – a genuine culture of collective intelligence.
Founded in 1998 by David Fraser and Clive Nates, the firm’s mission has always been to deliver superior risk-adjusted returns. The founders’ insight was to merge the rigorous, research-driven discipline of institutional investing with the agility of a flat, entrepreneurial structure. Over 26 years later, the result is a firm built to last.
The investment team
Peregrine Capital’s strength lies not just in individual talent but in its collective intelligence.
The team comprises four skilled portfolio managers and nine highly qualified investment analysts – each bringing unique insights to the table. Rather than a traditional hierarchy, the business operates with a flat organisational model. There is no single member in the investment team with veto rights or a final say; instead, daily meetings involve rigorous debate, where facts and merit, not titles, guide decisions.
In pursuing the best possible outcomes, we care only about the idea’s quality, not about its owner’s seniority or tenure.
Reed Hastings, founder and chair of Netflix, succinctly captures this mindset: Hierarchy is good for maintaining the status quo. Flat structures are better at discovering the truth.”
Peregrine Capital’s strategy has been to attract, develop, and retain high-calibre young professionals who are deeply passionate about investing and committed to continuous learning and excellence. This philosophy has fostered a culture of sustained intellectual growth and resilience.
As a result, Peregrine Capital’s foundations have remained remarkably steady over time. Over the past decade, four portfolio managers have transitioned out of the business, yet Peregrine Capital has remained robust. The investment process, rooted in collective intelligence and institutionalising learnings, ensured that our funds continued to deliver consistent, long-term returns for our investors, regardless of individual departures, underscoring the strength of a team-driven, process-led investment model.
The investment process
Our approach is deeply collaborative. Every investment idea is stress-tested, debated, and dissected. We are interested only in the best outcome for our funds, and this requires robust debate to ensure the best idea wins. Contrarian views are welcomed and encouraged because cognitive diversity reduces groupthink and overconfidence.
Ours is a team-first culture. When smart people push each other to think harder and aim higher, the end result is better for our funds. The whole is greater than the sum of its parts. When talented individuals collaborate effectively, their combined impact far exceeds what they could achieve alone.
The members of the team are conscious of their emotional and behavioural biases, and as a team they guard against this by stress-testing their ideas to remove emotion from decision-making. Decisions are made on a consensus basis, benefitting from input across the entire team. Consensus isn’t code for compromise – it means the best thinking wins.
Our flat structure facilitates constructive debate and the generation of diverse ideas, ensuring that decisions are well-informed and that only the best ideas are considered for funding.
Commitment to learning
A cornerstone of Peregrine’s success is our dedication to continuous learning. The team regularly reviews past decisions, especially errors, to institutionalise lessons learned and improve the investment process.
An error log is maintained to reflect on mistakes, so that the full team can benefit from their learning potential.
Consistent performance
When asked what underpins Peregrine Capital’s consistent returns, I point to three defining factors:
- Trust and partnership: We are fortunate to have committed investors who believe in our process and team and have benefitted from their labours through many market cycles.
- High performance culture: We protect our culture with intention and rigour. Entry into the team is highly selective, reserved for individuals with exceptional ability and passion for what we do. Candidates undergo a multi-stage evaluation process including several rounds of interviews, comprehensive psychometric assessments, and a proprietary problem-solving test.
- Fundamental principles: Our founders’ investment principles remain our guiding compass when evaluating opportunities.
The edge that endures
Peregrine Capital continues to evolve more than two decades on, without losing sight of its core principles.
Howard Marks, co-chair of Oaktree Capital Management, reminds us that in investing “the more insights you draw from a broad base, the better your chances”.
By building a high-performance team and hardwiring a process of rigorous debate and continuous learning, Peregrine Capital ensures that success is never reliant on any individual. It is a resilient, collaborative engine powered by process and discipline.
Performance is not the result of intuition or luck; it is the output of a well-designed system, an enduring culture, and a shared commitment to compounding insight over time. This is what makes the model durable and repeatable.
Since its inception, Peregrine Capital’s High Growth Fund has delivered over 180 times return on capital. In contrast, our Pure Hedge Fund has delivered more than 100 times the return for our investors, without ever recording a negative year.
Looking ahead, we remain dedicated to our mission: delivering superior risk-adjusted returns through the enduring power of collective intelligence.
Kavita Patel is an investment specialist at Peregrine Capital.
Disclaimer:
This article is intended for information purposes only and does not constitute financial advice, a recommendation, or an offer to invest in any financial product.
The High Growth and Pure Hedge Funds referenced herein are Qualified Investor Hedge Funds (QIFs), available only to investors who meet the prescribed eligibility criteria.
Past performance is not necessarily indicative of future results. All performance figures referenced are net of fees and expenses, and full fact sheets of funds can be accessed here.
Peregrine Capital is an authorised financial services provider (FSP 607).
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