[REPLAY] Paul Black - Gratitude, Fun, and Growth Stocks (Capital Allocators, EP.51)
Feb 5, 2024
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Paul Black, Co-CEO and portfolio manager at WCM Investment Management, shares his journey from a small boutique to managing $26 billion in global equities. He discusses the art of identifying growth stocks, emphasizing the importance of company culture and competitive advantages. Paul delves into lessons learned from past mistakes, navigating financial challenges, and the contrast between growth and value investing. He also highlights resilience and disciplined decision-making, while reflecting on the importance of work-life balance in today’s fast-paced environment.
Analyzing a company's competitive advantage and culture is crucial for successful investing.
Identifying companies with growing moats and positive cultures increases the chances of long-term success.
Maintaining optimism and focusing on long-term growth potential are key to successful investing.
Deep dives
Paul Black's Journey to Success in Investment Management
Paul Black, portfolio manager and co-CEO of WCM Investment Management, shares his journey in the investment industry. Starting with a small boutique firm in 1989, Paul highlights the importance of hard work, learning from mistakes, and constantly improving. He reflects on his early years in the business, where he learned the value of understanding the direction of a company's competitive advantage and the significance of culture in driving success. Paul also discusses the power of optimism in growth stock investing and emphasizes the importance of gratitude and fun in building a positive company culture.
The Importance of Competitive Advantage and Culture in Investing
Paul emphasizes the significance of competitive advantage and culture in investing. He highlights the need to assess the direction of a company's competitive advantage and understand the correlation between growth and stock performance. Additionally, he emphasizes the importance of analyzing a company's culture and values, aligning them with its competitive advantage. Paul provides examples of companies with strong cultures and how they outperform their competitors. By identifying companies with growing moats and positive cultures, investors can have a better chance of achieving long-term success.
Tailwinds and Optimism in Investing
Paul discusses the role of tailwinds and optimism in successful investing. He shares his belief in the growth potential of emerging markets, particularly China, and the positive impact of rising middle-class wealth. Paul also stresses the importance of investing in businesses in countries with an optimistic outlook. He highlights the value of understanding macro situations and how they affect investment opportunities. Paul concludes by urging investors to maintain a sense of optimism and focus on the long-term growth potential of their investments.
Lessons from Mistakes and the Value of Persistence
Paul reflects on his own mistakes and the importance of persistence in achieving success. He shares personal experiences of difficult periods in the firm's history, including a time when they lost a significant amount of assets. Paul emphasizes the need to learn from mistakes and remain committed to the business. He also advises staying focused on the core values and goals of the firm, even during tough times. Paul encourages others to keep showing up and to never give up, highlighting the benefits of long-term dedication and perseverance.
Challenges and Opportunities in the Allocation of Capital
Paul discusses the allocation of capital and common behaviors observed in the industry. He notes that many allocators tend to chase performance and select managers based on recent success. However, Paul emphasizes the importance of assessing the people and process behind a successful track record. He encourages allocators to focus on the long-term potential of managers, rather than solely relying on short-term performance. Paul highlights the need for allocators to have a balanced approach and a willingness to support managers through both positive and challenging market conditions.
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 Follow Ted on Twitter at @tseides or LinkedIn Subscribe to the mailing list Access Transcript with Premium Membership
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