Today, I’m going to talk about William Blair’s quality growth investment philosophy and how, in the large-cap space, we only invest in what we call structurally advantaged companies.
What is a structurally advantaged company? Very simply, it’s a company that we believe is going to be in a better position in the future than they are today. And we define that future as three to five years.
There are two critical elements that we use to define the structurally advantaged company.
The first is the industry or industry structure. We only want to invest in industries where the industry profit pool is growing at least as fast, or preferably faster than the overall economy, driven by powerful secular drivers such as digital advertising, e-commerce, and digital payments. Another area might be in healthcare, and most notably in the healthcare equipment side, where the aging population is driving the need and demand for new and additional healthcare equipment.
In terms of the company, we use the William Blair quality growth investment philosophy here. We want to invest in companies with a strong, competitive moat, unique products and services, pricing power relative to your average company, and a powerful distribution system, which flows into the financial model in terms of a relatively high degree of predictable revenues. We believe this leads to predictable earnings, cash flow, and ultimately, high returns on invested capital over time.
Filmed July 2020
The views and opinions expressed herein are those of the speaker(s) as of the date of publication, are subject to change without notice as economic and market conditions dictate, and may not reflect the views and opinions of other investment teams within William Blair. Factual information has been obtained from sources we believe to be reliable, but its accuracy, completeness, or interpretation cannot be guaranteed. This material may include estimates, outlooks, projections, and other forward-looking statements. Due to a variety of factors, actual events may differ significantly from those presented. This video has been provided for informational purposes only and should not be considered as investment advice or a recommendation of any particular strategy or investment product, or as an offer to buy or sell any securities or related financial instruments in any jurisdiction. Investment advice and recommendations can be provided only after careful consideration of an investor’s objectives, guidelines, and restrictions. Investing involves risks, including the possible loss of principal. Past performance is not indicative of future results.
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