The Rules of Investing: Is value dead?
When Warren Buffett first started buying businesses with ‘moats’ in the 80s, such as Coca Cola, his disciples thought he was crazy. More than 30 years later, buying businesses with a moat is accepted wisdom. Morningstar even offers a 'moat rating' on thousands of stocks from around the world.
"You can’t do the same things others do and expect to outperform." – Howard Marks
Today's guest is Kurt Winrich, Co-CEO and Portfolio Manager at WCM Investment Management, and he’s got a very different take on what a great long-term investment looks like. WCM is a staff-owned firm in Laguna Beach in California that manages over AU$36B for clients globally. They act as the investment advisor for Contango's Global Growth LIC, and will shortly be launching an Exchange Traded Managed Fund on the ASX. In today’s podcast, we discuss the importance of culture, why the size of your moat doesn’t matter, and where the world’s biggest opportunities will come from in the coming years.
“My favourite way to illustrate tailwinds is to talk about a business that you’ve found. It has amazing patents, it has competition going out of business, it’s growing its market share, a wonderful story. There’s only one problem; it’s 1920, the automobile is about to happen, and your company makes buggy whips.”
- The three key attributes to look for are; 1) A tailwind, 2) An expanding moat, 3) An aligned culture.
- A shrinking moat can be dangerous – just ask shareholders of Nokia and Yahoo.
- Investor’s shouldn’t allow ‘value’ to deceive them into thinking that an investment is safe.
- Culture is a huge differentiator between successful and unsuccessful organisations.
- Research isn’t about getting more numbers, it’s about talking to people who know the business well.
- Successful equities investing requires ignoring the pessimists.
Check out some of the past episodes of the podcast here.