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.
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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
