Into the deep

Our team has recently been engrossed by peculiar Instagram posts from Roman Fedortsov, a trawler from Murmansk—a port on Kola Bay in Russia’s extreme northwest. His posts are full of strange and somewhat horrifying creatures pulled from the ocean’s depths. These sea creatures are bold reminders of just how much of the ocean’s depths remain a mystery.

Deep sea exploration is an area of fascination within our research team. While much of the earth’s surface has been explored, most of the ocean remains uncharted. Indeed, we keep going into the depths only to discover new species; strange creatures like tardigrades, frill sharks or anglerfish. In an era where we assume so much is known, there is something humbling in this.

As investors, we can learn much from the spirit of deep sea exploration. It is our job to move beyond well-lit and well understood areas, and dive deep into the unknown. Whether it is exploring a new business model, technology, or country, we must be willing to pursue areas of the market that are dark to us if we are to gain advantages. In our team, one of the best examples of the pursuit into the unknown comes from “The Lab.”

The Lab at Mawer is comprised of a team within research that applies statistical rigor to important questions about markets. Inspired by the exceptional work of Bell Labs, the Lab seeks to better understand factors influencing value creation and to use those insights to identify market opportunities.

For example, in the past year the Lab has considered the following questions:

• What percentage of sell side analysts appear to demonstrate skill in stock picking?
• Historically, what countries had the most wealth-creating businesses in the world?
• Historically, which industries are the most wealth-creating? Wealth-destroying?
• Historically, which parts of the Mawer research process add the most value? Which parts add the least?

By applying statistical rigor to these questions, which previously had only stories for answers, we move further into uncharted territory in an attempt to shed new light on our surroundings.

Clearly each voyage into the unknown is not going to necessarily yield results; however, through our ongoing exploration, we open ourselves up to the possibility of transformative discovery.

It’s a vast ocean.