The Investing for Beginners Podcast - Your Path to Financial Freedom

Compounding Quality: Pieter Sleger's Approach to Identifying Great Businesses

Aug 26, 2024

In this engaging discussion, Pieter Sleger, founder of the Compounding Quality newsletter and a quality investing expert, shares his journeys in stock investing. He reveals insights on identifying great businesses, especially those with strong management and healthy balance sheets. Pieter emphasizes the concept of economic moats as sustainable competitive advantages and highlights the importance of pricing power in companies. He also discusses strategies for maintaining a savvy investment watchlist and the significance of Return on Invested Capital (ROIC) in evaluating potential investments.

01:05:10

Episode guests

Pieter Sleger

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Episode notes

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Quick takeaways

Quality investing focuses on acquiring shares of businesses with strong fundamentals and management, leading to long-term growth potential.

Personal experiences and mistakes in early investing highlight the importance of continuous learning and education in navigating the stock market.

Identifying companies with sustainable competitive advantages, or 'moats,' is crucial for investing in resilient stocks that exhibit consistent growth.

Deep dives

The Excitement of Stock Investing

Investing in stocks is seen as an appealing choice due to their long-term potential for wealth creation. Historical data confirms that stocks can yield impressive returns over time, with a dollar invested in the 1800s growing to an astounding $25 million today. The speaker emphasizes that investing in stocks is accessible to everyone and represents one of the easiest pathways to financial success. This admiration for stocks stems from a personal passion that began during adolescence, highlighting an enduring affection for researching and analyzing companies.

Intro

2min

The Art of Quality Investing

15min

Exploring Long-Term Investment Strategies and Company Selection

3min

Building a Strategic Investment Watchlist

6min

Understanding Economic Moats in Quality Investing

5min

The Power of Pricing in Insurance and Fintech

4min

Understanding ROIC and Quality Investing

25min

Exploring Investment Tools and Broker Choices

2min

Engaging Insights and Resources for Investors

3min

In this episode, we chat with Pieter, founder of the Compounding Quality newsletter, as he shares insights on quality investing, identifying great businesses, and his journey in the world of stocks.

00:00 - 00:07: Introduction of Pieter and his credentials, including his newsletter and book on quality investing.
00:08 - 02:37: Pieter explains why he chose to invest in stocks and shares his early experiences, emphasizing the long-term potential of equities.
02:38 - 07:16: Discussion on Pieter's first stock investment, mistakes he made, and how those experiences led him to educate himself on investing.
07:17 - 12:21: Pieter describes his approach to quality investing, focusing on finding great businesses with healthy balance sheets, led by strong management, and trading at attractive valuations.
12:22 - 15:02: Pieter discusses how he maintains a watchlist of potential investments and his focus on companies with high market caps.
15:03 - 20:49: Detailed discussion on the concept of economic moats, emphasizing the importance of investing in companies with sustainable competitive advantages.
20:50 - 24:04: Further elaboration on pricing power, with examples of companies that have successfully maintained high pricing power.
24:05 - 32:14: Insights into Pieter’s thoughts on return on invested capital (ROIC), its importance in identifying quality investments, and the challenges of disruption in quality investing.
32:15 - 49:02: Pieter's approach to valuation, including how he assesses whether a stock is overvalued or undervalued, using methods like forward P/E comparisons and reverse DCF.
49:03 - 56:56: Pieter discusses his ideal investment, focusing on companies with strong growth, reinvestment opportunities, and aligned management. He also shares his thoughts on the tools and platforms he uses for research.
56:57 - End: Conclusion, with Pieter offering to connect with others interested in quality investing and sharing where to find his resources online.

Learn more from Pieter here:

Compoundingquality.net

X: @QCompounding

LInkedIn: Pieter Slegers

Today's show is sponsored by:

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