The Moat Attack

Today’s conversation is with Dan Davidowitz and Jeff Mueller of Polen Capital, which is a firm that is dedicated to researching and analyzing the highest-quality companies around the globe and investing for the long haul and with a business owner’s mindset. Dan is the co-head of the Large Company Growth Team and the lead portfolio manager of the firm’s flagship Focus Growth strategy. Jeff is co-portfolio manager of the Global Growth strategy and earned his MBA from Columbia Business School, where he was a graduate with honors and distinction of the Value Investing Program.

This episode is our third recording since the coronavirus health crisis, and we have kept doing it remotely. Since Spring Break, Columbia Business School has gone fully online and I am absolutely in awe of how the school has been able to pivot to this new format almost seamlessly and we owe this to the terrific people who have been working tirelessly throughout this challenging period and who deserve all our appreciation.

My goal with these episodes is to bring guests on who can help us navigate the investment environment and the enormous uncertainty surrounding the economic impact of the virus, which in my opinion is far from clear. I believe our listeners should be focusing on a rigorous, bottom-up approach or on funds that practice a bottom-up approach that is resilient to a variety of scenarios. Thus far the economic impact is probably a bit under-estimated, but it affects different sectors differently and thus the opportunity to build a resilient portfolio is there.

On this episode, Dan, Jeff and I discuss how they developed their investment philosophies, what value means in today’s market environment, what you need to know about investing in compounders, the value of guardrails, and so much more!

Key Topics:

• The impact of the current coronavirus pandemic on life at Columbia University (1:02)
• How Dan found an interest in business and finance while pursuing studies in Public Health (6:13)
• What Dan’s first buy-side job taught him about value investing (7:54)
• Why frustration led Dan to learn more about the modern approach to value investing (9:00)
• Polen’s compounder approach to value investing (9:42)
• The importance of being with an organization whose approach aligns with your investment philosophy (11:07)
• How the events of September 11, 2001 re-routed Jeff’s career (12:15)
• Why Jeff set himself the goal of attending Columbia University (13:02)
• Jeff’s philosophy on wealth generation and investment (14:24)
• The evolution of the US financial markets since Graham’s first writings (15:20)
• What does value mean today (21:00)
• The key elements to consider when analyzing compounders (24:32)
• Why Polen doesn’t seek new investment opportunities based on economic trends (29:53)
• Polen’s approach to quality analysis of potential investments (34:57)
• Investing within a small pool of potential companies (40:22)
• The never-ending quest for knowledge (42:51)
• What moat attacks reveal about barriers to entry (44:53)
• Polen’s perspective on building resilient portfolios (50:07)
• How the Polen Focus Growth portfolio has been adjusted in light of the coronavirus crisis (54:57)
• The importance of Polen’s guardrails (57:44)
• The changes to the Polen Global Growth portfolio in the current crisis (59:25)
• Dan and Jeff’s outlook for the future of value investing (1:02:08)
• And much more! 

Mentioned in this Episode:

• Polen Capital
• Value Investing with Legends Season 3, Episode 4 | C.T. Fitzpatrick - Value Investing in Times of Deep Distress 

Thanks for Listening!

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