Fund Manager Q&A

For decades, traditional wisdom held that value investing is the only way to outperform, and with good reason. Until the GFC, value had outperformed growth in all but a few brief periods, and those periods immediately preceded a major bear market. But for nearly a decade now, growth has produced superior returns.

A look at the top 10 companies in the world articulates a fascinating story. As the world exited the worst of the GFC, the top 10 companies in the world were all still traditional businesses – oil, supermarkets, banks, and telcos. 10 years later, the list is dominated by digital businesses.

This week’s guest on the podcast is Nick Griffin, Chief Investment Officer at Munro Partners, and he believes these businesses are fundamentally different to traditional ‘bricks and mortar’ businesses.

“Google’s now worth just over $800B. It’s the number one search engine in the world. The number two search engine in the world was Yahoo, and they sold it last year for $6B. That’s a 99% difference between number one and two. That doesn’t happen in any other industry… That network effect means that a lot of these companies are growing well beyond the borders that we traditionally thought possible.”

In this week’s podcast, we discuss:

  • How and why he came to the growth investing philosophy
  • The role of valuation for a growth investor
  • The power of network effects and why digital businesses are so different to traditional businesses
  • The five characteristics of a great growth company
  • Why Netflix could be a $400B company
  • Why Amazon is still cheap at current levels
  • The potential source of the next megacorporation and the disruption of traditional sports

Links discussed in the interview:

  1. Hendrik Bessembinder - Do Stocks Outperform Treasury bills?
  2. The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies. Written by Erik Brynjolfsson & Andrew McAfee.

About Munro Partners

Munro provides all investors, with an institutional quality, global fund manager with the ability to identify sustainable growth trends that are under appreciated and mispriced by the market, and the resulting winning and losing stocks. Find out how.

Mark Cardell

I liked this one a lot, thanks.