Paul Black is Co-CEO and portfolio manager at WCM Investment Management, a $26 billion manager of global equities that he joined when it was a $200 million boutique in 1989. With so much of the institutional world, including my own training, focused on value investing, I was pleasantly surprised to learn about a large, high performing growth stock manager located in a non-descript building in Laguna Beach, California.
Our conversation starts with Paul’s trial-by-fire entry into the business and turns to growth stock investing, including defining a great growth company, searching for widening moats, assessing a culture tied to competitive advantage, creating a positive culture, learning from mistakes, identifying tailwinds, and protecting the downside.
Paul embodies the principals he preaches and offers some tasty food for thought.
Learn More Read the Transcript Subscribe to the Capital Allocators Blog or Monthly Mailing List Don't Subscribe, but Let Us Know Who You Are Write a review on iTunes Follow Ted on twitter at @tseides Review past episodes of the Podcast
Show Notes
2:54 – How Paul got started in the business
4:52 – Lessons learned in the early years of his career
5:56 – Common Stocks and Uncommon Profits and Other Writings
6:01 – Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor
6:05 – The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel
7:49 – What works about growth stock investing
9:01 – What constitutes a great growth company
13:47 – Defining and measuring a company’s competitive advantage
17:50 – How does he assess a company’s culture
19:41 – The Culture Cycle: How to Shape the Unseen Force that Transforms Performance
20:26 – Questions that help assess company culture
21:57 – Any data to back up claims that companies with good cultures perform better over time
22:46 – Culture aligning with competitive advantage
24:30 – Looking at WCM’s moat and culture
31:23 – The landscape for active management
33:53 – Weathering tough periods for the firm
37:02 – How do they think about culture in other countries
39:01 – Why does growth stock investing work when the data shows otherwise
40:47 – What is he excited about in growth stocks
43:45 – Tailwinds at the sector level
45:10 – Downside protection in the portfolio
46:38 – Patterns of positive and negative allocator behavior
48:35 – How do they manage the change in the portfolio going from 200 million to 26 billion
49:53 – Closing questions
