MI367: How to Invest in the Best of the Best: Quality Investing w/ Shawn O'Malley
The Intrinsic Value Podcast - The Investor’s Podcast Network
Understanding Quality Companies and Pricing Power
This chapter investigates how high-quality companies maintain their pricing power, especially during economic disruptions such as the pandemic. Using Chipotle as a central example, it highlights key characteristics that enable these companies to raise prices while keeping customer loyalty intact.
In today’s episode, Shawn O’Malley (@Shawn_OMalley_) breaks down different investors’ approaches to finding the best of the best companies to own. It’s a strategy known as Quality Investing, and it differs from value investing because quality investors are more focused on finding companies to own forever, as opposed to selling them if they rise above their current intrinsic value.
You’ll learn how definitions of quality vary, how quality investing is still rooted in value investing, what the patterns and building blocks of high-quality companies are, why pricing power is a great way to identify quality businesses, how Chuck Akre approaches quality investing, what Jim Collins’ research on enduringly great companies reveals, and how Chris Mayer finds stocks with 100-to-1 returns—plus so much more!
IN THIS EPISODE, YOU’LL LEARN
00:00 - Intro
02:15 - How Quality Investing traces back to Ben Graham
03:10 - What quality investing is generally, and how it differ from other strategies
03:32 - What are the patterns and building blocks of quality businesses
07:51 - Why pricing power is so important to quality stocks
12:37 - How Chuck Akre’s three-legged stool approach to quality investing works
22:12 - What Jim Collins’ intensive study of enduringly great companies reveals for investors
29:57 - How Chris Mayer finds stocks that generate 100-to-1 returns
32:46 - How to define and determine whether a company has a winning corporate culture
41:55 - Why quality investing is really an art form
And much, much more!
*Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences.
BOOKS AND RESOURCES
- Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Kyle and the other community members.
- Compounding Quality’s Investing Philosophy.
- Three-Legged Stool Masterclass.
- Chris Mayer’s blog
- Jim Collins' book, Built to Last.
- Thomas Peters' book, In Search of Excellence.
- Michael Porter's book, Competitive Advantage.
- Lawrence Cunningham's book, Quality Investing.
- Thomas Phelps' book, 100 to 1 in the Stock Market.
- Jim Collins' book, Good to Great.
- Chris Mayer's book, 100 Baggers.
- Long Equity's book, The Intelligent Quality Investor.
- Check out the books mentioned in the podcast here.
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