Why this manager is avoiding today’s ‘hot’ stocks

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When the pandemic hit, there was a number of companies that garnered more attention than others. Consider Zoom, which now has a market cap of $US85 billion – $US10 billion more than the long-established Colgate-Palmolive. Bob Desmond, head of international equities at Claremont Global says he understands why companies like Zoom and Tesla are attracting attention but he’s happy to pass on these new exciting industries where the long-term winner is far from certain.

“Relative to the profitability of the company you have to make a lot of assumptions about future growth, so we stay away from things like that,” he says.

In this video he explains why it makes more sense to look at a company’s valuation and track record, and the role competitive advantage plays.

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Claremont Global is a high conviction portfolio of value-creating businesses at reasonable prices. They consider ourselves true stock-pickers and look to avoid owning businesses that depend on a benign or favourable economic environment. To learn more, use the contact button below.

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