The Rules of Investing 700+ meetings each year: How WAM Global uncovers under-the-radar stocks
In investing, just as in love, trust is everything - and without it, you really don't have anything at all.
It's for this reason that the Wilson Asset Management global equities team meets with more than 700 management teams across the world each year - including in the US, Japan, and Europe. In addition, they also meet with competitors and suppliers, as well as talk to current and past employees and industry experts.
According to WAM Global (ASX: WGB) lead portfolio manager Catriona Burns, the team does this because trust in a company's management team is paramount.
"Have they hit their targets? Have they done what they said? If we have any doubts on that trust factor, for us, that's completely a non-negotiable and we won't invest," she says.Burns is reading between the lines, and looking beneath the surface for red flags. And while management teams selling stock, poor track records and value-destructive deals can certainly be warning signs, she argues that alignment - and the lack thereof - can often be far more telling for the future direction of a company's share price.
"Incentives drive outcomes... I can't tell you how many times I have seen incentives for management based on earnings per share growth," she says. "Companies just chase acquisitions to meet earnings growth without thinking about the returns that are being generated on the dollars spent. That happens time and time again and is a massive red flag."In this episode of The Rules of Investing, Burns takes listeners through some of the companies that have managed to pass her filters, as well as why catalysts are so important for investors with a penchant for value.
She also outlines why the listed investment company's growing annual yields won't be slowing over the next five years, what it's actually like on the ground in the US right now, as well as what the US election at the end of the year could mean for markets.
Note: This interview was recorded on Tuesday 14 May 2024.
- 0:00 - Intro
- 1:21 - What it is actually like on the ground in the US
- 2:14 - Catriona Burns' outlook on rates and inflation
- 3:26 - The WAM Global (ASX: WGB) investment process (and the importance of trust)
- 8:09 - Alignment is everything + why CTS Eventim (ETR: EVD) is a good example
- 9:35 - Artificial intelligence and where Catriona is invested here
- 13:38 - On not owning NVIDIA (NASDAQ: NVDA)
- 14:41 - Why she's overweight financials and healthcare
- 16:47 - Picks + shovels approach versus drug developers in healthcare
- 18:18 - Stock with major catalysts on the horizon: CTS Eventim (ETR: EVD) and Quanta Services (NYSE: PWR)
- 20:01 - Why catalysts are so important
- 21:27 - The sustainability of WAM Global's yields + franking credits
- 22:46 - How to think about performance
- 24:33 - Why Catriona is bullish on the outlook for global small and mid caps
- 25:42 - One thing investors are getting wrong about today's markets
- 26:51 - US politics + what a Trump win would mean for markets
- 29:10 - A story of a loss from Catriona's career and what she has learnt from this
- 31:19 - One stock that Catriona would buy and hold if the market were to close for the next five years: Intercontinental Exchange (NYSE: ICE)