Meet the Investor - Overlook Investments Limited - Mr. Richard H. Lawrence, Jr.
Richard Lawrence on Investing with Impact: Climate Responsibility and the Evolution of the Voluntary Carbon Market
It was our honour to hear from Richard Lawrence, the Founder and Executive Chairman of Overlook Investments Group, as he shared insights into his investment philosophy and approach. Established the firm in 1991, Overlook is an independent fund management company managing a concentrated portfolio of public equities across Asia, excluding Japan, with a total investment of US$ 7 billion. Over the past 30 years, Overlook has achieved an impressive annual compound growth rate of over 14% for its investors. Richard also explored the topic of Voluntary Carbon Market, which is discussed in greater detail in his latest book, "Carbon Done Correctly”.
The impacts of climate change are evident, with rising sea levels causing significant challenges, such as the Netherlands being partially submerged for years. While governments struggle to respond and adapt swiftly, the onus falls on individuals and corporations to take decisive action against climate change.
Richard Lawrence exemplifies individual responsibility through his efforts in a rural village in Honduras, where he built 50,000 stoves. The traditional method of cooking with coal produced toxic smoke, adversely affecting the health of women and children. Due to a lack of education, the women had difficulty operating the new stoves, leading to many being abandoned. Dedicating many years of his life to this cause, Richard made several modifications until the stoves were widely adopted, demonstrating his commitment to improving the lives of rural families. This resonates deeply with Gen Z's mission of making a profound and lasting impact through purposeful investments, not only in companies but also in people's lives.
Among the few corporations that have taken a leadership role in combating climate change is Salesforce. Initially, carbon credits were only sold to individuals, but Salesforce's purchase of high-quality carbon credits helped expand the voluntary carbon market to include corporate buyers. Corporations are essential to the success of the voluntary carbon market, which provides a scalable, market-based solution for reducing emissions. Despite facing criticism, the voluntary carbon market aims to redistribute wealth from large multinational corporations in the US to third-world countries for large-scale environmental projects. However, participation from both governments and corporations remains insufficient. Only a few corporations have stepped up to lead and become part of the solution and these are the companies we aim to support through our investments.
Generation Z Investment Club, VIP
Calista CHEW
The session with Mr. Richard H. Lawrence, Jr., Founder and Executive Chairman of Overlook Investments Group, was both informative and insightful. Overlook is an independent fund management company that manages a concentrated portfolio of public equities throughout Asia, excluding Japan, with an impressive US$ 7 billion in investments. Over the past 30 years, Overlook has achieved a remarkable annual compound return of over 14%.
During the first half of the session, Richard discussed about the Voluntary Carbon Market (VCM), focusing on two notable carbon-reducing projects: fuel-efficient cookstoves in rural communities of Honduras and a mangrove-growing initiative in South India. He provided a detailed explanation of how VCM works and how it supports meaningful carbon-reducing projects through carbon credits. He also shared his view on how the carbon market would evolve (e.g. gold standard certification taking less time over the years) and the need for greater transparency and quality within the VCM to unlock its full global potential. With limited knowledge about the VCM market previously, this part of the session provided me with a basic understanding of the current VCM landscape and its challenges. I learned about the carbon-reducing projects, the importance of project selection (to avoid greenwashing), and the potential impact of these projects on local communities and the environment. The subsequent Q&A session also enriched my learning, especially when a participant discussed the potential of blockchain technology to enhance transparency in the VCM. This discussion opened my eyes to the innovative solutions being explored to address transparency issues in carbon markets.
In the latter half of the session, Richard delved into the investment model of Overlook Investment Group. A key takeaway was Overlook’s Pyramid framework, which aims to drive the portfolio to the top of the pyramid and maintain it for periods of 3.5 to 10 years. This strategy struck me as particularly useful for selecting businesses to include in investment portfolios. I learned that a disciplined approach to investment, focusing on superior businesses and maintaining a long-term perspective, is crucial for sustained success. Richard’s explanation of the Pyramid framework highlighted the importance of strategic thinking in portfolio management.
Richard also pointed out the value that investment management can add during bear markets. He offered a different perspective, viewing bear markets as times of significant value creation. He advised investors to prepare for (rather than predict) bear markets, highlighting that new leaders often emerge from such downturns. This perspective has reshaped my view of bear markets, now seeing them as opportunities rather than solely periods of decline. I learned that bear markets can be times of great potential for identifying undervalued assets and that maintaining a proactive and prepared stance can lead to significant gains.
Finally, Richard shared insights on activism in investing, emphasizing the importance of personal relationships. He explained that developing relationships with the "real McCoys" of a company is crucial for companies to listen to the concerns of investors. He emphasized that even individual retail investors can act as active stewards if they are persistent, citing his experience with TSMC’s Morris Chang as an example. He also noted that companies are more likely to engage with investors who demonstrate a long-term commitment. Additionally, he mentioned that the option of divesting should be exercised if companies did not address investors’ concerns. From this, I learned the value of engagement and persistence in activist investing, and the impact that individual investors can have on corporate governance and long-term sustainability.
Overall, the session was an invaluable learning experience, offering practical insights and strategies that I can apply to my own investment approach. The knowledge gained has deepened my understanding of the VCM, reinforced the importance of a disciplined investment strategy, highlighted the potential of bear markets, and underscored the power of activist investing.
Generation Z Investment Club, EIP
Nicholas TAN
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