“I’m third generation,” says Thor Furuholmen, with a rueful smile. “You know, the generation that throws it away.”
No chance. His family wealth has compounded at an annual growth rate of 10% since 2007 when he took control of it. He has rebuilt his reputation as a hedge fund owner following the 2008 credit crisis and led the development of Norway’s most successful ski resort.
Venture capital promoters are routinely, but politely, shown the door. Furuholmen also avoids asset allocation exercises because he only has so much time in a day. But he likes to own businesses with a strong cash flow while avoiding bonds for fear of rising inflation triggered by central bank money-printing.
We were going to make a short term profit. We thought we might make five or ten times our money. But we lost everything because we did something where we had no competence and could not carry out due diligence on their people
Furuholmen only trusts people he knows well. In 2016, his family business, AS Vidsjå, was attracted to a new boutique, Equitile Investments, primarily because he has known its founder, Andrew McNally, for 15 years.
Marius Flaaten, head of Furuholmen’s ski resort business, served a five-year probation before becoming its chief executive, aligned with Furuholmen after getting shares in the business.
Furuholmen says: “When I am hiring, I look for candidates who are competent, humble and honest. I like to do business with people I have known for a long time.
“I like long due diligence periods. We need to harbour our capital and if you rush things you make mistakes. You also overlook revolutionary ideas: I like non-conformists.”
Furuholmen inherited his family wealth from his grandfather, who ran one of the largest construction businesses in Oslo, building a series of oil rigs and hydro-electric power stations. The family sold out in the 1980s, just before the sector ran into recession: “We were quite lucky.”
Following the deal, the family retains joint ownership of real estate, largely let to the public sector: “They don’t pay the highest prices, but their contracts are longer and we are happy to make the trade. We want to own a resilient portfolio.”
Members of his family jointly own the real estate. The rest of their money is split four ways: “We don’t have a single-family office. We talk to each other, of course. But we don’t feel obliged to travel in a direction, where someone ends up feeling uncomfortable.”
He is unrelated to Magne Furuholmen, keyboard player with Norwegian rock band A-ha. “He lived on a farm to the north of us. We used to get phone calls from fans in Japan and Korea, asking to speak to him.”
Twenty years ago Furuholmen’s father agreed to buy AS Parks, the owner of ski resorts in Oslo and Drammen, from the local municipality.
Things ticked over until Furuholmen took direct control in 2005. He went on to hire Flaaten, who suggested that they went to North America to see if there were ways to improve turnover.
They returned, convinced they needed to change their ticketing system: “We used to have 50 different types of ski pass, and an expensive season ticket. We simplified everything, by offering a drop-in ticket and a much cheaper season pass. People bought the season and we doubled our skier base. It was a no brainer.”
More recently, they have introduced year-round season tickets for his winter and summer season through a membership model.
The money has financed the purchase, and upkeep of snow machines, essential to reassure users booking trips they will be able to ski, as the climate changes. The Oslo run is the busiest in Norway: “It’s nice to be associated with something that people appreciate.”
Furuholmen is delighted at the way the resort has developed, with the resort delivering an Ebitda margin of 45%: “It is getting harder and harder to find companies with an Ebitda higher than 40%.”
He has deep reservations over tech-driven venture capital. It doesn’t help that he ended up losing money on a business which tried to turn crab shells into cosmetics as well as a photo-voltaic company.
“We were going to make a short term profit. We thought we might make five or ten times our money. But we lost everything because we did something where we had no competence and could not carry out due diligence on their people.
“I have a very firm strategy document which gives me advice on how to say no these opportunities.”
But you should never say never. Furuholmen’s backing for Equitile amounts to its use of technology to compete on fee with the rest of the asset management sector and pick stocks capable of responding to evolving market conditions.
Its fund has risen by nearly a half since March 2016. Furuholmen is delighted: “It’s a good model, and great to be working with Andy again.”
Their paths crossed when he was a junior stockbroker at Carnegie and McNally worked at Henderson Global Investors, a Carnegie client. McNally later joined Morgan Stanley and persuaded Furuholmen to come to London to build a European small and mid-cap team of analysts.
Furuholmen says: “I remember going onto its trading floor during the dotcom bubble. It was absolutely mad.”
He moved back to Norway in 2003 when his wife was expecting their second child. He went on to develop a hedge fund business and McNally left to take on the heavily-conflicted German private banking establishment at private banking upstart Berenberg.
Furuholmen called his hedge fund Explora Capital, which played to his strengths by taking long and short positions in European small and mid-cap stocks.
He says: “We compounded 22% a year. We were one of the best in our area until the crisis of 2008. We had a big short exposure going into it but we had no idea how bad it was going to get. Funds of hedge funds wanted to redeem, and we warned them it would cost a lot of money in a market with no liquidity. We decided to close the fund down, rather than trying to gate it. We lost 60%.
“We had made clients, including our family, a lot of money, then we lost them money. I knew we weren’t alone, but it was very painful. I felt I’d let them down. I felt I’d let myself down.”
But Furuholmen was determined to retrieve the situation. He first backed Taiga Fund Management in 2007 and, after the crisis, it was generating strong performance. He said: “It’s done about 18% compound since inception by investing in small companies with a Nordic bias and an activist approach. We made our money back, and more.” Managing £220 million, it has closed to new business and stays true to small caps.
Furuholmen delegates management to the Taiga team: “We found them. We trusted them and we gave them a very solid long-term framework that allows them to do their job properly.”