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We are very much long-term growth investors. And by long term, I mean five years minimum time horizon. When people invest with us, they must realise that is going to be the case.
We also look for growth companies; businesses that can double their earnings over that five-year period as a minimum.
We are very much bottom-up stockpickers. It is all about companies for us. The macro, interest rates, or geopolitical issues are not of interest to us.
If you look at our portfolios, there is very low turnover - less than 20% - and a very high active share, so, we will be very different from any index. We call ourselves "actual investors", rather than active. We do that for a couple of reasons.
We believe actual investors like us should be returning to the fundamentals of investing, which is to allocate capital to companies and entrepreneurs who can create wealth for a whole variety of stakeholders. That is the social purpose of fund management. We also think that is key to what we do.
We believe markets are driven by a small number of very big winners, and the key to successful active management is to try and find those and hold on to them while they compound over a period of time. So that is what we try to do: find the big winners.
We are not diversified for the sake of diversification, we will have concentrated portfolios and tend to hold fairly big holdings in companies that we like, which is a reflection of our enthusiasm.
This means we will be volatile against the index and we are happy with that. Because if you look at us over a five-to-ten-year period, you will see volatility smooths out. And we expect to significantly outperform over that period.
We are not all about Tesla. We own less than 2% in that company. We have sold an awful lot of Tesla and made a lot of money, but it is not all about Tesla, nor is all about tech, either.
We get this kind of lazy label around tech but not we are not tech investors. This kind of sectorial label just brings back memories of the tech bubble bust at the turn of the century. That was more than 20 years ago, and companies have changed.
Lockdown measures accelerated the growth of the operational performance of a lot of our holdings. Things that we have been holding anyway: Zoom, Ocado, Teladoc, Chegg, Wayfair, Amazon obviously, Alibaba and Netflix. These are all big holdings for us, and they have done incredibly well.
The big question for us is if growth is just being brought forward for these companies, or whether things have changed.
We accept that there has been an element of growth brought forward but the long-term direction of these companies, although accelerated in the short term, is still very positive.
This is an incredibly important area. We have specific positive change and impact funds that have a dual target: to make money for its investors, but also to improve things.
It is [about] trying to understand those big problems and how they might be solved, and that is key. As a growth business, the type of companies that we invest in will be sustainable in that sense.
Also, on the subject of engagement it is important to understand that if you are engaging with a company all the time, you probably invested in the wrong one.
I think we do live in an era of great change and disruption, and the opportunities as a result are huge.
If you look at the index, there is a lot of pain around utilities, financials and drug companies. These are businesses that are all being disrupted. These are massive changes in that sense.
The ability to add computer power, the influence of the internet and how you can reach billions of customers is such a game changer because you do not need to have vast amounts of capital to scale up your business.
So, if you have a massive cost base and a new industry, then you are ripe for disruption and destruction.
Would you invest in Marks & Spencer? No, because it is a dead company. John Lewis? They have both failed to embrace e-commerce, they have either owned or rented sites, and large workforces based in shops. That is just the old economy.
First published by our sister title Investment Week
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