Rampart Talks: Hamish Douglass

It's time for another episode of Rampart Talks, and my guest this month is Hamish Douglass, the co-founder and former godhead of Magellan Financial Group.

Until 2021, Magellan was the envy of the street, with a sustained record of index outperformance, more than $100 billion of funds under management and rivers of fee income gushing through its doors.

And until he disappeared abruptly from public life in February 2022, Douglass was undoubtedly Australia's most famous fund manager, with a carefully cultivated image of Australia's own Warren Buffett.

The meltdown of Magellan and the breakdown of Douglass were inextricably linked, though the latter has – to date – never been fully explained.

In this episode, for the very first time, Hamish speaks publicly about his inner turmoil. We explore the huge changes in his personal life and identity; the disturbing rumours about him that survive to this day; the mental breakdown that left him a shadow of his former self; and his message of hope, having made a full recovery.

We discuss all things Magellan, including his cosplaying of Steve Jobs for a stadium crowd of financial advisers; his much-analysed relationship with co-founder Chris Mackay; the company's near-fatal key man risk exposure; and the seeding of Barrenjoey ("Barrenjoey was my idea," he says; our interview was recorded just days before the March 2 announcement of Magellan's effective takeover by Barrenjoey).

I accused him of getting carried away with being a pseudo-virologist in the Covid pandemic rather than focusing on the fundamentals of the equity market. His response:

"That is not unfair. I think that was one of my mistakes… We had a panel of world-renowned experts who were, wrongly, deeply sceptical of the effectiveness of what the [Covid] vaccines were going to come up with, and I became infatuated with the expert advice around that. It was what caused me to miss the macroeconomic side, which is, of course, what the central banks were doing and what the fiscal authorities were doing. Every other time we would have backed the fiscal and monetary side of things solving markets. None of us had experienced a pandemic in our life, and you're absolutely right, Joe, that I made a major mistake going too deep down that route."

It was a big thing for Hamish to sit down with me – of all people – given I was the journalist who in December 2021 revealed his marriage separation, arguably triggering a run on Magellan's global fund and on its ASX-listed shares; and then continued to unpick his confused public statements.

At one point, Hamish mentioned in passing the "vicious" newspaper coverage he received, which undoubtedly referred to my many columns in 2021 and 2022 in The Australian Financial Review. Knowing now what was going on behind the scenes then has inevitably caused me to reflect on my own role in Hamish's unravelling. I've said many times that the story about Hamish's marriage was one of the hardest stories I've ever written – if not the hardest – but the relevance of his personal situation to public market investors cannot be denied.

I also only wrote half the story, being the only half of the story that was my business to tell. Douglass, and Magellan under his direction, made disclosure choices at that time that were plainly catastrophic errors of communication even if they were perfectly understandable on a human level. Magellan's enemies and dispassionate short-sellers took full advantage of the information vacuum. Hamish and I traverse all of this in our interview.

In all of these long-form interviews, the subject will explain things in a way that causes me to question my previously-held views, and mount other arguments that aren't convincing at all.

In Hamish's case, an example of the latter was his defence of Magellan's loan-funded employee share scheme, which I found completely uncompelling.

An example of the former was Hamish's explanation for selling his Magellan shares in 2022, which I stridently criticised at the time. As he explained, he was no longer a Magellan director, no longer a Magellan executive, and no longer had any say in the company's direction. He pointed out – without a shred of self-pity – that he sold at the bottom, not the top, and that even after selling down, Magellan remained his single-largest personal investment. His sin, really, was assuring the market in December 2021 that he would never sell his shares, but he could not have known that at that moment, he was on the cusp of a total breakdown that would incapacitate him for multiple years.

There is so much more in this episode, so I encourage you to access the full version, which runs for 86 minutes. The full version is only available to Rampart's premium subscribers, who can watch on rampart.news or listen via Spotify or Apple Podcasts (if you haven't already activated this integration with your preferred podcast app, you can do so here).

For Rampart's free list members, a 12-minute cut is available on rampart.news, YouTube and all the major podcast players.

I hope you enjoy it.

Previous episodes: James Packer, Gillon McLachlan, Brad Banducci, Jayne Hrdlicka, Nick Molnar, Matt Comyn, Oliver Curtis