The CEO of J. Rothschild Capital Has a Bullish Thesis on SpaceX and Anthropic

Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions Saved Articles My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomePMN BusinessThe CEO of J. Rothschild Capital Has a Bullish Thesis on SpaceX and AnthropicMaggie Fanari says Elon Musk’s rocket company was the first investment she made for RIT Capital after joining the firm in 2024.Author of the article: You can save this article by registering for free here. Or sign-in if you have an account.(Bloomberg Markets) — Maggie Fanari took the helm two years ago as chief executive officer of J. Rothschild Capital Management, which manages RIT Capital Partners Plc, one of the UK’s largest investment trusts. The firm carries the name of Jacob Rothschild (1936-2024), who founded Rothschild Investment Trust in 1971 as a vehicle for the famed European banking family’s English branch. After leaving N.M. Rothschild & Sons in a dispute over the direction of the investment bank in the 1980s, he listed the investment trust, renamed RIT, on the London Stock Exchange in 1988. The Rothschild family remains the largest holder of the investment trust, which has £4.6 billion ($6.1 billion) in assets.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountFanari, a 47-year-old British-Canadian, first crossed paths with the Rothschild team about 15 years ago when she headed high-conviction equities at Ontario Teachers’ Pension Plan. She joined RIT’s board in 2019 and was named CEO of JRCM in January 2024. Fanari also chairs the firm’s investment committee. Her conversation with Bloomberg News Senior Editor Claire Obusan has been edited for clarity and length.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againCLAIRE OBUSAN : What’s the clearest way to explain RIT to someone who’s never encountered it?MAGGIE FANARI : Think of it as a family office that is really looking to maximize as much growth as possible while minimizing or mitigating downside risk. So equity-like returns with lower risk. How do I translate that into numbers? Since inception [in 1988], we’ve generated a return of 10.6% a year on average. We’ve captured 71% of the monthly market rises and only 40% of the market declines. You get a very nice, strong compounding portfolio.CO : One of the hallmarks of RIT as an investment trust, with a closed-end fund structure, is that you have permanent capital. What advantages does that give you?MF : It gives us a couple. What it allows us to do is have a multi-asset-class portfolio. We invest in public markets but also in private markets. You really need long-term permanent capital to be able to invest in private markets — be that private funds or directly in some great companies that we own.It gives us a differentiated appeal to our partners, because they know we never have to go to them and say we need to sell because we have fund redemptions. The other component is, when you see volatility in the markets like we have over the last couple of years, it means we don’t have to sell at inopportune times. In fact, it means we can be quite tactical and buy during market downturns.CO : How much of the challenge, when you stepped into your role, was portfolio construction, and how much was organizational?MF: The culture was great. A lot of it was just a little bit more organizational. Also, too, our firm is publicly listed. Anyone can invest alongside us in our deal flow. But what we really needed to do was enhance our transparency with shareholders and also build out certain departments and improve our investor relations function, our communications function, and really be much more front-footed than we had in the past. We’ve received a lot of positive feedback from being able to do that over the last two years. I do fundamentally believe that being transparent and giving data to your shareholders is particularly important, because then they can track how the company is doing. Then the returns and how the portfolio is operating just kind of lets them say, “Yeah, I expected that. I expected them to be down that month,” or, “I expect them to be up that month.”This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.CO : RIT has traded at a meaningful discount to its net asset value for years. With the changes you’ve made, what do you think the discount is a function of? Is it a communications problem or something else?MF : One thing is sector. Normally what you see is a correlation between discounts and when interest rates are high. When interest rates come in, the discounts come down. Then the other one was, a few years ago, there was some concern around our privates portfolio. There’s a level of transparency you can provide, but it’s not the same as a public stock that gets a mark to market every day.What we’ve been able to demonstrate over the last two years is we’ve been able to realize a third of our portfolio. And that’s all been above our NAV price. Last year our direct portfolio was up 50%, our privates portfolio was up 18%. What we’re known for is we look to invest alongside the best private equity and venture capital general partners in the world. Thrive, Greenoaks, Iconiq, Ribbit — these are some of our core partners. Because they’re early on key themes, including artificial intelligence and fintech ­infrastructure, we’re able to realize those returns, while other people say, “The privates market is really muted. There are no realizations.”Last year we had three exits. They were all investments made in 2021. The average internal rate of return was 22%. It was close to 2.2 times return of capital and about 100% over the last, December 2024, mark. Again, we just need to continue to get our track record out and people to understand that we are different. Our brand gives us the ability to work with, in our view, some of the best partners in the world.CO : What were the three exits?MF : Three companies: One was called Webull [an online brokerage that went public after merging with a special purpose acquisition company], another was Xapo Bank [a Gibraltar-based private bank for Bitcoin holders that did a management buyout]. And then the other one is [data-labeling company] Scale AI, which was acquired by Meta. So you had two M&A takeouts, and then you also had one company go public.CO : For the investors who focus on the discount, what are they missing?MF : We do trade at a discount, as do many of our peers in the market. For new investors coming in, it’s very much an opportunity. It’s very much downside-protected through the discount. Last year our share price total return was up 17%, and our portfolio was up 13.5%. We will look to increasingly narrow that discount for investors, and we will continue to demonstrate strong realizations. We’ll increase our transparency, and we’ll continue to enhance our shareholder engagement.CO : I have to ask about SpaceX. You caught on very early, back at Ontario Teachers’ Pension Plan. What made you decide this was something worth doing?MF : I got to know the SpaceX team during my time at Ontario Teachers’. What was really interesting to me around SpaceX was obviously the founder [Elon Musk], an incredible founder. Really a business that was very mission-driven and made the impossible possible — NASA said you can’t have a reusable rocket. I thought that was amazing.Also just the cost advantage. What sparked my interest at the time was their ability to produce satellites for a couple hundred thousand dollars. Having been a generalist investor over my career, I’d also looked at other satellite investment opportunities: The average cost was $10 million to get one satellite into orbit. When I saw the unit economics on this, combined with one of the most consequential founders of our time with a company that had reusable rockets, it was pretty clear to me from a moat perspective, their ability for growth and what they’re doing would be entirely transformational.Then in 2024 it was the first investment I made for RIT. I came into the business and realized we didn’t have any SpaceX exposure, and looking at the business and the valuation and the growth over those seven years, and having spent a lot of time with the management team, it was very apparent to me that there was more growth to come. I wanted to get as much SpaceX as I could reasonably own in the portfolio from a sizing perspective, but I thought it was definitely a company that we had to own.CO : At one point it was your eighth-largest holding, right?MF : It would’ve been in our top 10 holdings across our entire portfolio, and it was our largest direct investment after they completed the $800 billion-valuation funding round. We were up multiples of money already at that time. More so with the IPO. I think SpaceX continues to be a fantastic company with a number of growth prospects. It’s becoming vertically integrated: You’ve got the launch business, you have Starlink. Now you’ve got compute, and you’re combining that with xAI. I continue to see a lot of long-term runway for continued compounding and growth.CO : Another investment you guys have recently made was Anthropic. What was it about Anthropic?MF : We’ve been very selective. Maybe if I could just talk a little bit about our AI themes, going back to diversification and how we think about how much exposure we’d like to have to the AI theme. We largely expressed that through our privates portfolio, because we think most of the innovative companies are happening in privates. Last year, when we were doing diligence work on both Anthropic and Databricks [a startup provider of AI and data applications], we could see the enormous growth that was coming through those businesses.We actually looked to sell a lot of our existing public market software exposure. We sold companies like Microsoft, GoDaddy and Salesforce. Then we said, “How do we want to invest along the AI value chain? We’re going to look at the frontier models.” Looking at Anthropic and the growth rates, and just generally the fact that you have a founder who is very focused on how he’s developing his models, it became very clear that Dario Amodei is an “N-of-1” [one of a kind] founder. That’s part of the investment thesis really, finding these N-of-1 founders and a company where we’ve never seen such growth rates. This company started in 2022 with $10 million of revenue. Today it’s assumed to be $45 billion and just continues to grow. That to us said, in frontier models, if we’re going to invest directly, we’re going to do that in Anthropic.Then we thought about where we wanted to be in the AI infrastructure base, and we were very fortunate in our ability to invest in Databricks, which continues to grow. Then we thought about how are we invested in terms of AI applications, and we’ve got some great names both directly and indirectly in our portfolio, and companies like Stripe and Ramp who are really benefiting from that.CO : In your letter in the last annual report, you wrote about AI, and the other theme you talked about was macro and geopolitical uncertainty. How are you thinking about the world right now? Where do you see opportunity?MF : We see two structural themes shaping the way we invest. The first is AI and technology, and we have a very large allocation to the US. Our portfolio overall is 50% weighted to the US and 50% rest of world. A year ago we would’ve been more than 60% weighted to the US. But what we did on the public side, going back to how do we want to be diversified, is we really believe in the theme of a more multipolar world.We’re already seeing that, where countries understand that they need to invest in their own sovereignty. What does that really mean? It means countries recognize they need to focus on reindus­trializing their own economies — a bit of deglobalization that’s starting to come through. We’ve seen countries like Germany say, “OK, we’re going to run a fiscal deficit.” We recognize that we need to focus on our own energy security. Also, as we’ve seen things like the Russia-Ukraine war — countries also recognize that they need to focus on their own defense. They recognize that they need to figure out how to build their own AI infrastructure.What we were starting to see is the potential for the start of a commodity supercycle. As a result, we started to invest in emerging markets as well.It’s exciting for active managers and the idea of diversification. It’s very different than a world we saw a few years ago, where it was largely only seven stocks driving market returns. Just given how heavily weighted cap-market indexes are today toward technology, it’s not necessarily clear that investors have as much diversification as they think they do.As we look out into the world, what key risks are we concerned about? I would say the key one that we’re keeping an eye on is inflation and where rates are headed. That very much has an impact on everything that we’ve been discussing. We’ll just have to see what that looks like, but inflation is a key risk.Obusan is a senior editor at Bloomberg News in New York.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.