This week, we speak with James Andersonpartner at Baillie Giffordthe Edinburgh, Scotland investing giant that manages $470 billion in client assets. He runs FTSE-100-listed Scottish Mortgage Investment Trust, a $23.5 billion fund, where since 2001, he has generated returns of 1,700%.

He declares the fund management business to be ‘irretrievably broken’, observing “fund managers are addicted to the near-pornographic allure of earnings reports and macroeconomic headlines.” They are overly focused on short-term returns while failing to recognize that great companies take years to develop.

He also critiques the recent market tendency of spending more money on stock buybacks and dividends than it has raised in new capital. He is not a fan of financial engineering and believes the focus should be on research and development and focusing on new products and services than share buybacks.

A list of his favorite books is here; A transcript of our conversation is available here Monday.

You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloombergand Acast. All of our earlier podcasts on your favorite pod hosts can be found here.

Be sure to check out our Masters in Business next week with Samantha McLemore, Miller Value Partners Co-CIO, and founder/CIO of Patient Capital Management. She has been a portfolio manager at Miller Value Partners, co-managing with Bill Miller their flagship $2.9B Opportunity Trust Fund, which has posted returns of 24% per year over the past 5 years, besting 99% of peers.

James Anderson Favorite Books

Scale: The Universal Laws of Life, Growth, and Death in Organisms, Cities, and Companies by Geoffrey West

Factfulness: Ten Reasons We’re Wrong About the World–and Why Things Are Better Than You Think by Hans Rosling

The Ladies’ Paradise by Emile Zola

The Kill by Emile Zola

Germinal by Emile Zola