Value Investing with Legends
The Multi-Faceted Future of Value Investing with Henry Ellenbogen and Anouk Dey
Podcast summary created with Snipd AI
Quick takeaways
- The future of investing lies in flexibility, combining exposure to both private and public markets, and embracing disruption and change.
- Investing in both private and public markets requires a deep understanding and assessment of the people behind companies.
- The process of identifying long-term compounders involves evaluating a company's potential for growth, market dynamics, valuation options, and the company's ability to transform and adapt for sustained growth.
Deep dives
Value investing as a fundamental way of thinking about finance
Value investing is not just an investment strategy, but a fundamental way of thinking about finance. It promotes the study and practice of original investing principles while improving investing through education, research, and dialogue.
The importance of flexibility and embracing disruption in investing
The future of investing lies in flexibility, combining exposure to both private and public markets, and embracing disruption and change. This multifaceted approach allows for a more comprehensive investment process and better opportunities for growth.
The role of people and intellectual honesty in successful investing
Investing in both private and public markets requires a deep understanding and assessment of the people behind companies. Intellectual honesty, commitment to growth, and an ownership mindset are key qualities to look for in entrepreneurs and executives for successful long-term investments.
Building Relationships in Private Markets
The podcast discusses the advantages of public equity analysts in the private market, highlighting the importance of building relationships with entrepreneurs and venture capitalists. These relationships are based on security analysis and a long-term commitment to the success of the companies. By being a reliable and supportive investor, with a focus on durability and sustainability, analysts can establish networks and become trusted partners for entrepreneurs seeking long-term investment.
Analyzing Companies for Compounder Potential
The podcast delves into the process of identifying companies with the potential to become long-term compounders. It emphasizes the importance of deeply understanding the people, processes, and systems of the company, both in its current state (Act 1) and its potential for growth and expansion (Act 2). The hosts use an example of Shopify's growth to illustrate the evaluation of market dynamics, valuation options, and the company's ability to implement a successful Act 2. The analysis involves monitoring key performance indicators and assessing the company's ability to transform and adapt for sustained growth.
Today’s conversation is with Henry Ellenbogen and Anouk Dey from Durable Capital Partners. Henry founded Durable in 2019 and serves as Managing Partner and Chief Investment Officer. Before that, he was a Vice President of T. Rowe Price, T. Rowe Price Group Chief Investment Officer for U.S. Equity Growth, the lead Portfolio Manager for the U.S. Small-Cap Growth Equity Strategy, and the Portfolio Manager for the New Horizons Fund. Anouk is a Partner of Durable who joined the firm at its inception in 2019. Before joining Durable, she was also a Vice President of T. Rowe Price Group, where she was an investment analyst in the U.S. Equity Division, focusing on small-cap growth stocks. Anouk also co-teaches the Compounders Independent Study at Columbia Business School.
My students have heard me say many times that the future of investing must be one that combines exposure to private and public markets and that is flexible in its valuation approach and ideas, and that embraces disruption. That type of investing requires partners that are willing to commit capital for the long haul while being able to withstand the volatility of the market. That’s where Durable Capital Partners stands out.
On this episode, Henry, Anouk, and I discuss how Henry developed his investment philosophy, how a liberal arts background gives you an advantage in the investment industry, Henry and Anouk’s lessons from their time at T. Rowe Price, Durable’s commitment to long-term relationships with the companies they invest in, their unique approach to knowledge acquisition, and so much more!
Key Topics:
- How Henry started his career in investing after exploring different fields (3:41)
- The beginnings of Henry’s investment philosophy (6:04)
- Major lessons from Henry’s study of the history of technology (8:53)
- The benefits of a liberal arts background (9:41)
- Why crisis is the true test of an investor (11:00)
- The stroke of luck that took Anouk from ski racing to studying international relations (12:38)
- How Anouk got the opportunity to spend her first year as an investor studying compounders (14:44)
- Henry’s early role as an analyst at T. Rowe Price (18:18)
- The move from traditional media analyst to managing the T. Rowe Price New Horizons Fund (19:59)
- What you can learn from studying media companies in the early 2000s (21:00)
- Why Henry started looking at private companies as investment opportunities (23:37)
- Creating a systematic approach to investing in private companies (25:38)
- The foundation for building a network of companies with unique access (26:51)
- Advantages for public security analysts over venture capitalists in the private market (29:06)
- What Durable wants to be known for (30:07)
- How Durable’s perspective on relationships and long-term commitment are in alignment with entrepreneurs (31:18)
- Durable’s approach to knowledge acquisition (34:01)
- Looking at Shopify as a company that has gone from Act 1 and 2 to a potential Act 3 (37:05)
- Durable’s approach to analyzing and supporting company leaders (41:24)
- Managing the risk of human capital (45:25)
- The importance of honoring your commitments and managing capital successfully during a crisis (47:46)
- Eliminating the false dichotomies in the investment industry (51:59)
- How you can reduce your learning trajectory around compounders (55:19)
- The advantage of working in collaborative teams at Durable (57:26)
- Idea sourcing as world-class fundamental investors (1:00:01)
- Understanding the good to great thesis (1:01:22)
- The value of deeply human investing (1:04:15)
- Building on the human skillset (1:06:13)
- How passive investing is affecting market volatility (1:08:30)
- And much more!
Mentioned in this Episode:
Thanks for Listening!
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