Equity Mates Investing Podcast Why most investors are looking in the wrong places - Frank Thornmann | Schroders
Sep 25, 2025
In this engaging discussion, Frank Thornmann, a Portfolio Manager at Schroders, shares his insights on identifying companies with a 'positive growth gap.' He highlights Netflix as a prime example of surprising growth through strategic investments. Frank also critiques the short-sightedness of markets, emphasizing opportunities in Europe that many investors overlook. He discusses the benefits of long-term investing versus short-term trading and explains how AI's potential is being selectively integrated into business strategies, focusing on practical examples like Meta.
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Positive Growth Gap Defined
- A positive growth gap is the difference between the manager's forecasts and consensus expectations for a company's future earnings.
- Frank seeks companies where that gap is large and likely to produce positive surprises versus consensus.
Netflix As A Growth Gap Case
- Frank used Netflix as a long conviction that surprised the market after COVID when subscriber growth resumed and scale advantaged its content spend.
- That positive surprise translated into strong financial results and good returns for the fund.
Markets Are Myopic To Inflections
- Markets are often myopic and overemphasise short-term results while underestimating long-term inflection points.
- Frank deliberately looks long-term and seeks company-specific inflections that consensus misses.