Research to runway: Investing in disruptive business models
Feb 27, 2025
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Lara Pellini, a seasoned portfolio manager at Capital Group with over 23 years of experience, emphasizes the need for hands-on research in identifying disruptive business models. She shares insights on navigating sectors like food delivery and fashion, highlighting the critical role of sustainability and adaptability. The conversation also explores innovative opportunities in eyewear technology, the resilience of luxury brands in economic downturns, and the importance of community support in investment journeys.
Lara Pellini highlights the importance of primary research and hands-on experience in developing informed investment strategies beyond traditional analysis.
She advocates for long-term investment based on solid business models rather than volatile market trends, emphasizing company fundamentals over macroeconomic factors.
Deep dives
The Value of Community Engagement in Capital Group
Lara Pellini joined Capital Group in 2001, inspired by its Capital Associate Program, which emphasizes community engagement and nonprofit work. The program allowed her to work at a nonprofit of her choice, which was a significant factor in her decision to join, as the culture at Capital Group resonated with her personal values. Over the years, the program has continued to prioritize community involvement, with Capital contributing significantly to various organizations, amounting to $350 million in donations over the last decade. This commitment to supporting nonprofits reinforces the importance of social responsibility within the company.
Hands-On Research: Gaining Insights from the Field
Lara emphasizes the critical importance of primary research in her investment strategy, often going beyond traditional analysis to gain firsthand experience in the industries she covers. For instance, her research on European food retailers included working directly in stores, such as Tesco, where she interacted with customers and observed operations. This hands-on approach not only deepened her understanding of the business models but also enhanced her investment insights, as she could evaluate management styles and company cultures. By blending fieldwork with traditional research methods, Lara believes she can craft more informed investment strategies.
Long-Term Investing through Market Fluctuations
Lara supports the philosophy of long-term investment over short-term market reactions, focusing on business models rather than transient trends. Using Zara, a leader in the apparel retail sector, as an example, she highlights how its innovative supply chain allows adaptability to market demands, making it a compelling long-term investment. Despite cyclical downturns, brands with strong foundations can weather economic changes, which reinforces her strategy of concentrating on enduring business principles. This approach contrasts with the more speculative tendencies some investors might have, especially during volatile periods.
Leveraging Macro Factors for Investment Opportunities
In her investment management practice, Lara acknowledges the importance of macroeconomic factors while emphasizing that they shouldn't dominate her investment decisions. She shares past experiences with companies that thrived during economic downturns, such as Inditex's Zara during Spain's recession, demonstrating the value of looking beyond macro conditions for potential investment gems. Lara’s experiences in various economic climates have shown her that difficult periods can offer unique opportunities, as undervalued companies often emerge in challenging environments. By focusing on company fundamentals and long-term growth, she aims to capitalize on these opportunities without being swayed by market sentiment.
How can investors identify disruptive business models that can maintain growth? For Lara Pellini, it involves a travel-intensive, hands-on approach to evaluating companies. Listen in as Mike Gitlin interviews this London-based portfolio manager about everything from fashion trends to food delivery, and why she believes successful investing involves much more than just reading annual reports and quarterly financial statements. #CapGroupGlobal
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Capital Group was established in 1931 in Los Angeles, California, with the mission to improve people’s lives through successful investing. With our clients at the core of everything we do, we offer carefully researched products and services to help them achieve their financial goals.