William Blair’s Large Cap Growth Strategy is grounded in identifying growing companies in growing industries—what we call structurally advantaged companies. In this video two members of our U.S. growth and core equity team—Jim Golan, CFA, partner, portfolio manager, and Nancy Aversa, CFA, partner, research analyst—explain why they believe this focus has the potential to create unique alpha opportunities for our clients.
Watch the video or read the recap below.
Jim: William Blair has been quality growth investors now for many decades. But in the large-cap space, we have what we call our structurally advantaged framework. So the way we approach large-cap growth investing is it’s really a research-intensive approach, where we’re trying to identify mispricings or inefficiencies in the large-cap growth marketplace. The end result of that is finding companies where we believe the stock price is mispriced relative to its long-term earnings growth power and the durability of that growth.
Nancy: My primary focus is looking at the outlook or the opportunity for a company over the next three to five years and identifying the characteristics of the business that we find compelling both from an industry perspective as well as company-specific opportunities. And I believe that sets us up for success in terms of identifying companies that are going to have compelling long-term growth opportunities.
Why is your focus on structurally advantaged companies important to the success of the strategy?
Jim: It really boils down to the fact that we are giving our analysts a very narrow pool to look at in terms of companies that they’re analyzing for potential investment ideas for the portfolio. So when you take a step back, we have a universe of well over 800 companies that we can potentially invest in. And through this framework that we have in place, we really narrow that down in terms of companies that we feel have great industry characteristics and strong company-specific characteristics.
So the advantage of this structurally advantaged framework is our analysts aren’t out there chasing shiny objects. It’s very focused, very narrow, focusing on what we believe to be the very best companies and the best industries for our portfolio.
How do you try to neutralize unintended risks?
Jim: Sector and market-cap neutrality is an important risk-management tool that we use for our portfolio. Our goal is to have sector and market-cap neutrality. And the reason why we do this is we believe it lessens the overall volatility of the portfolio—provides a smoother ride for our clients’ portfolios over time.
What do you like about large-cap growth investing?
Jim: It’s incredibly intellectually stimulating and rewarding. Going out and finding a great stock, a diamond in the rough, is incredibly rewarding on an intellectual basis, but also very rewarding for our clients.
Nancy: My favorite part about large-cap growth is that it’s a little bit like finding a needle in a haystack. These companies are large. They’re well understood by the market. And so the idea is to try to identify the underlying characteristics of the business, but trying to sort of tease out something unique or underappreciated by the overall market.
As you look forward, industries may present compelling opportunities?
Nancy: I would say there’s a number of consumer trends that I think are relevant not only in the U.S. but globally, the first one being health and wellness. We see dynamics in athletic apparel or sportswear, as well as even in beauty and healthcare. We also see opportunities as it relates to travel and other experiences. I think especially post-pandemic, consumers are looking for opportunities to really get out of the house and have experiences rather than necessarily only spending on durable goods.
What is your edge in large-cap growth investing?
Jim: This might actually sound trite, but it really comes down to our people. You know, everyone says people make the difference, but in our case, it really does. David Ricci and I, the other co-manager of the strategy, really sat down many years ago and were very thoughtful in terms of how we structured the large-cap growth team.
And we decided that it was not going to be a command-and-control structure, where you might see this in other places where the PMs are telling the analysts what to work on. We give the analysts the freedom, the flexibility, to go out there and find great ideas for the portfolio.
Jim Golan, CFA, partner, is a portfolio manager on William Blair’s U.S. growth and core equity team.
Nancy Aversa, CFA, partner, is a research analyst on William Blair’s U.S. growth and core equity team.
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