Growth investing
with Charles Plowden

Our viewpoint

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Show hosts Dan Mikulskis and Mary Spencer sit down with Charles Plowden from Baillie Gifford for his thoughts on growth investing.

Key takeaways

Some of Charles’ principles for growth investing

  • Focus on what’s inevitable over the medium term (10 years)

  • Don’t pursue certainty – you’ll always be the last man in

  • Hold your opinions lightly

  • Constantly re-evaluate the case for each investment

Points on process

  • You want to see a better than average chance of doubling money over 5 years

  • On average 30% of companies will do this, so aim to do better than that

  • Importantly, you don’t need to be right all the time, or even half the time

Other key takeaways

  • Charles disputes that growth stocks are expensive or over-valued. The widespread focus on things like P/E ratios creates an opportunity for investors that embrace growth

  • “Whitespace” – the difference between the valuation and what you can justify the company achieving – became popular to explain things in 1999/2000. We are a long way away from that today. The fundamentals are getting better and justify what the valuations are

  • Split time between unearthing new ideas and underwriting the case of existing ones. There is a different skill between selling and buying. Variety of outlooks on the team

  • Charles doesn’t recognise QE having a material impact on growth stocks – they are winning because they are winning in the real world

  • Current accounting frameworks fail to account for tech and growth businesses (intangibles, earnings, investment etc). Tech firms have understated earnings because of their investment in intangibles, but there is no magic system to re-jig the numbers to see through that

  • No conflict between companies doing good and having good investments

  • In the context of Charles’ imminent retirement, is he getting out at the top of the market? He sees it as the tip of the iceberg

One thing to take away

  • Growth investing isn’t a style that can be picked up and put down, or a set of factors that can be mimicked. It’s a fundamental belief about investing (and it is surprising how few people actually do it)

Most under-appreciated thing about investment

  • The investment industry has badly let itself down over the last 10-20 years. The industry has lost its way, but can and should be seen as a force for good


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