Navigating Investment Challenges

This chapter illustrates the critical role of an investment firm in guiding companies like Scout24 through challenging takeover bids, emphasizing the risks of short-term strategies. It highlights the importance of adaptability in investment decisions, using examples like Credit Suisse to stress the need for investors to heed cultural signals and focus on long-term growth potential.

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Inside ownership can give companies an advantage when it comes to long-term growth. That includes having a leader or family with a substantial stake in the business. And it also covers firms with farsighted backers, such as philanthropic foundations, which encourage management to take the long view. From airline Ryanair to hearing aid specialist Demant, investment manager Jenny Davis explores how having skin in the game drives firms to act with persistence.

Background:

Jenny Davis is a Baillie Gifford partner and an investment manager in our International Alpha Team. She specialises in companies based outside the US that offer ‘quality growth’ – combining the potential for outperformance with durability.

In this podcast, she explores how persistent, inside ownership works to the advantage of companies she has backed. Examples include firms with founders who have retained a significant stake, those with long-serving hired leaders rewarded with shares and other long-term incentives, companies with family owners where control has passed between generations, and businesses backed by a foundation or holding company with long-term objectives.

Companies covered include:

Discovery – the health insurer that has gone global, using data to nudge customers into improving their fitness.

Ryanair – the European airline that benefited from its chief executive’s obsession with controlling costs.

Technoprobe – the family-run ‘probe card’ specialist whose ability to spot faults in computer chips has kept pace with semiconductors’ increasing complexity.

Demant – the hearing aid specialist backed by a charitable foundation, which has invested in getting closer to its customers.

Scout24 – the German property portal whose independence Baillie Gifford helped preserve, allowing it to pursue a successful long-term growth strategy.

Resources:

Baillie Gifford

A new age of discovery: the case for international (restricted to certain clients)

Pioneers: 8 Principles of Business Longevity from Immigrant Entrepreneurs

Short Briefings on Long Term Thinking

Companies mentioned include: